From the news last week,when Moodys forecasted a growth rate of nearly 7% for India over this fiscal year,one could conclude that the worst is over. Efforts to push back the economy towards a double-digit growth began right in the first month of 2013 by the RBI rate-cuts,followed by an optimistic budget dealing with the Food Security Bill,various infrastructure bottlenecks and a careful framework of policies in order to avoid fuelling inflation. Numbers support the facts – the Composite Purchasing Managers Index showed high growth in January and February,with India outshining none other than China itself,while investment growth as measured by gross fixed capital formation picked up to 5.1% from 4.4% a year ago.
The question,however,to ask at this point is despite the worst being over,is the future certain?
That would depend on how the policies prescribed are implemented and how the budget targets are met in reality. The fiscal deficit should be contained by reducing distortionary subsidies while protecting Plan expenditure,credit flow for Infrastructure spending needs to be made easier,and the most important need of the hour is to simplify regulations. Development on the GST,Companies Bill and extension of banking facilities to rural and suburban India would serve as instruments to not only improve policy environment,but also make our economy an attractive investment for the world.
F-182 (section C)
Joint Finance Secretary
FMS Batch 2012-14
(This entry is part of our FE MASTERMIND contest. The views expressed in this article are personal and not that of the newspaper.)