July 8, 2008

Change the subject

UPA should now see a great opportunity as it has to show momentum in policy-making and change the subject from gloomy predictions to on the political consequences of inflation.
The last major achievement in the Indian financial sector was in 2001 when rolling settlement was pushed onto the equity spot market.

The Percy Mistry and Raghuram Rajan reports have carefully thought through financial sector reforms, India's engagement with globlisation and macroeconomic policy framework.The UPA can now push through roughly three-quarters of the recommendations of the two reports.

For the elections, the best strategy for UPA is that they can now adopt is siilar to what was done by NDA with the Fiscal Responsibility and Budget Management Act(FRBM). This way UPA needs to embark on far-reaching reform of fiscal architecture and fiscal rules.The implementation of Goods and Services tax (GST) is a natural opportunity to do that.

The UPA  should work on three quarters of these fiscal reforms leaving the last quarter for the coming government  to deal with as NDA did.

Expenditure is the missing link in the Indian economy now. In education Government should slowly exit the higher level. In preventive health care, on issues wuch as epedemiology and vaccination, a major push is required on public sector solutions.

( Source- The Indian Express)