‘Inflation and high growth rate are major challenges for next fiscal yr’
The new government has huge responsibility as the budget for the fiscal year 2015 is to be announced on Thursday. Given that the BJP-led government made promises to curb inflation and achieve a higher growth rate, it is to be seen what steps would be taken for the next fiscal year to do so. The head of Department of Commerce, University of Delhi (DU); Jai Prakash Sharma said: ‘India is poised to be third largest economy along with US and China, to play a leading an important role in global economy.’
Evaluating the steps to be taken to achieve a sustainable growth rate, he added ‘In a developing economy, a high growth target entails a moderate level of inflation. RBI must strike a balance between price stability and growth while formulating the monetary policy.’
According to the Economic Survey for 2013-14, it stated that the growth slowdown in the last two years was broad based, affecting in particular the industry sector. Inflation too declined during this period, but continued to be above the comfort zone, owing primarily to the elevated level of food inflation. ‘All taxes, Central and state that go into an exported product should be waived or rebated. Taxes prove to be huge burden for exporters. Also, exports are vehicle in reducing fiscal deficit,’ said JP Sharma. He further said: ‘We must achieve the target of fiscal deficit of 3 percent of GDP by 2016-17 and remain below that level always.’
Infrastructure, which is a major element of development has to be looked upon. A well developed infrastructure may lead to boon in investments and hence, growth rate. ‘The road map should include massive investment in infrastructure. The investment can be mobilized through Public-Private Partnership,’ said Sharma. Further, elaborating on the subsidies and how they are been misused, Sharma elaborated: ‘Subsidies, which are absolutely necessary should be chosen and targeted only to the absolutely deserving.’ As education and health are important tools of development, they should get more focus. ‘Skill development must be given priority at par with secondary and University education. Also, sanitation and healthcare must be taken care of,’ added Sharma.
Evaluating the steps to be taken to achieve a sustainable growth rate, he added ‘In a developing economy, a high growth target entails a moderate level of inflation. RBI must strike a balance between price stability and growth while formulating the monetary policy.’
According to the Economic Survey for 2013-14, it stated that the growth slowdown in the last two years was broad based, affecting in particular the industry sector. Inflation too declined during this period, but continued to be above the comfort zone, owing primarily to the elevated level of food inflation. ‘All taxes, Central and state that go into an exported product should be waived or rebated. Taxes prove to be huge burden for exporters. Also, exports are vehicle in reducing fiscal deficit,’ said JP Sharma. He further said: ‘We must achieve the target of fiscal deficit of 3 percent of GDP by 2016-17 and remain below that level always.’
Infrastructure, which is a major element of development has to be looked upon. A well developed infrastructure may lead to boon in investments and hence, growth rate. ‘The road map should include massive investment in infrastructure. The investment can be mobilized through Public-Private Partnership,’ said Sharma. Further, elaborating on the subsidies and how they are been misused, Sharma elaborated: ‘Subsidies, which are absolutely necessary should be chosen and targeted only to the absolutely deserving.’ As education and health are important tools of development, they should get more focus. ‘Skill development must be given priority at par with secondary and University education. Also, sanitation and healthcare must be taken care of,’ added Sharma.