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In the horns of a dilemma Low profile moves INDIA keeps its date with destiny Sustainably developing manufacturing sector… Public investments and welfare will surge They add lustre to Padma Awards Why throw baby with bath water? Wanted: decentralised financial system A blueprint for the future What the big B should offer? Focus on agriculture and human resources Why (not) abolish? BJP can now hasten its thrust for reforms 1800 parties registered with EC – Less than 60 contest elections When the examiner cheated... Sardar Sarovar – the seventy year itch Much ado about nothing Two welcome measures from the chief minister... A historic indirect tax reform It’s raining funds for states. Really? The deluge and the several kindly souls Outward ho CSR, tech revolution and bank crisis Sowing seeds of hope Trail-blazing Tamil Nadu Research for survival... Oh my GOLD Focus on southern TN... Welcome Measures. Work for 10X Change Miles to go... Much can be done by us Well-administered State Rail-road Rajaraman Economy through the month Healthy finances of the Chennai Corporation CAD and the emergency thereof After all, customer is the king Truce at Kasturi Buildings Need for radical RBI reform An eco-friendly commute in Mysuru Skewed Economic Zones? If not Tamil Nadu, where else? Land, land everywhere, but... Industry can’t get it from Mars, yet Babes In the wood-RBI North block has little clue to curb inflation Reform this licence to…kill Babes In the wood-RBI North block has little clue to curb inflation Jobs - Lost, Changed or Gained Welcome move to widen the tax net… Make way for Make in India... South India’s 100 most valuable companies Tryst with GST MS Installed TN - so much to offer... Pool energy prices Little surplus after salaries, subsidies and debt servicing You too T M Krishna? Indian GST – Between extremes… Cleansing Indian retail The Great Fall Better relations with UK... Kudos to GIM organisers... Deming awardees galore! How will it PAN OUT Tax evaders’ get out of Jail-Free Card Chennai Airport-Ready for a rapid take off... Policy Makers Weaving wealth of western Tamil Nadu Technology and economic development should be linked PC please be our Santa Breaking news or breaking credibility? A gratifying record An eventful week with VVIPs of Delhi Ganesh’s mantras Strategic planning the missing link Star of the South Need plan over the long term planning A tale of two Bihar babus A Fine division of responsibilities No groundnuts in groundnut oil! A dual GST that will protect prosperous states Welcome rains for damaged roads...
 
What the big B should offer?
The Indian economy is at the crossroads. It is awaiting tough fiscal policy response from the finance minister, which would be painful in the short-term, but would invoke the confidence of all stakeholders in the future of Indian economy.
FINANCE MINISTER CHIDAMBARAM is being overwhelmed with multiple challenges as he gets ready to formulate Budget 2013-14 – reviving growth, containing inflation, reducing trade gap and current account deficit, removing stumbling blocks in infrastructure development, rejuvenating investment outlook, targeting poverty reduction, covering deficits in social sector performance, strengthening financial sector and what not. To cap it all there is a threat of downgrading from the international credit rating agencies.   

Of course, such challenges tend to become ritualistic in nature, especially there have been when two or three crucial years of policy paralysis; and also in the wake of persistent hostile global economic environment. Perhaps never before was there such a constellation of formidable issues.

Effectively, Budget 2013-14 happens to be the chance for the UPA II government before the next general election in early 2014. It has an uphill task to prove its commitment to the implementation of pending reforms agenda; revitalise ‘animal spirit’ of investors; and ‘go for growth.’ Or in the usual quest for populism around this time, there would be the temptation to indulge in aggressive ‘social-welfare’ spending. In the long run such a strategy would be unsustainable and there would not be any political dividend to reap.

On the contrary, it is high time for the UPA II government to unveil its political maturity and sagacity through bold policy reforms. It is time to bite the bullet and administer the needed ‘bitter medicine.’ That’s the only way to restore the confidence of stakeholders in the future of our economy. 

Here’s my wish list.

First, putting the fiscal house in order. There can be no further fiscal drift. The likely revised estimate of fiscal deficit to GDP ratio of 5.5 per cent in 2012-13 needs to be reduced to 4.5 per cent or even lower in 2013-14, and to 3 per cent thereafter by 2015-16. There must be a visible action plan. There is the need for a regular tracking of this target with month-on-month performance review of key budgetary data. It is also necessary to formulate monthly cash-flow system of budgetary accounting under major heads of receipts and expenditure.

All such information must also be made available in the public domain. Such rigorous scrutiny would send right signals, including to the RBI to move quickly towards softening of interest rates policy; and also avert the prospects of downgrading of country’s credit.
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