Focus on Human side of Growth;
To say that it is the prime responsibility of any Sovereign State to ensure the wellbeing of the masses is to stress the obvious; Our Country in recent times has almostcatapulted itself into the League of Big Nations by virtue of its economic might,increasing clout in the comity of Nations, et al. The GDP by any reckoning is goingto touch 8.5-9% by end Fiscal 2011. But with headline Inflation at 8.2% and Foodprice Inflation at 11.05% , the Inflation adjusted wellbeing of the common man(whether he really matters?) is any body’s guess. Add to that the slew of incidencescorruption in different facets of the economy (not even sparing the mighty scientificcommunity) which has surfaced( or resurfaced?) in the country in recent times thatvirtually robs the credibility out of the whole Governance process.
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Viewed in the above backdrop, the Budget for the year 2011 should necessarily focus
ReplyDeleteon the following domineering issues:
i)
ii)
Rampant corruption in the country certainly calls for clear policy
initiatives/ directions by the Government to stem the rot, as otherwise this
will put us at least two steps backward for every step forward .
The current macro challenges before the economy are controlling Inflation
and sustaining growth, while in the previous year, fiscal stimulus was
the need of the hour; The Government should take result oriented steps to
contain retail Inflation thro’ focussed attention on supply side issues like
ensuring appropriate functioning of PDS mechanism/ moving goods from
surplus pockets to deficit areas/ checking on hoarding etc. There is a limit
for relying on monetary policy to control Inflation. While monetary policy
attempts to control Inflation thro’ better control of money supply, the
spike for the current Inflationary spiral has come from non-core aspects
of Inflation like rise in prices of food articles due to supply bottle necks,
the effect of rising crude prices etc. While these may be easily dubbed
as transitory, the Govt must realise that these are the core areas which
directly affects the common man , which needs to be addressed squarely.
iii)
iv)
As per the latest data, the government is on track in anchoring its fiscal
deficit to 5.5% of GDP in 2010-11. Although Central Government
Finances are in line with the Medium Term Fiscal policy Statement
Roadmap, in order to meet the Thirteenth Finance Commission (TFC)
target for Revenue Deficit and Gross Fiscal Deficit at zero per cent and
3.0 per cent of GDP respectively by 2013-14, steeper corrections would
be necessary by 2013-14. The Budget for FY 11 should re-orient itself
towards these goals.
With a view to achieving the various fiscal policy targets as outlined
above, the Government must simultaneously focus on reducing unwanted
expenditures and thro’ improving revenues. These can be achieved thro’
aggressive targets for disinvestment, widening the Service Tax net,
reducing excise exemption limits and pruning excise duty exemptions.
v)
The other focus areas for the Budget 2011 would be boosting FDI in
Insurance and multi brand retail, ensuring the smooth rollover of Goods
and Services Tax (GST) regime and putting in place the Direct Tax Code
(DTC) as scheduled, by 1.4.2012.
Thus, the Govt must ensure the existence of a conducive economic environment
which fosters growth with social justice.
G.K.Murthy
Chief Manager
Vijaya Bank, H.O
Bangalore-1.