prasad1
Active member
A year after the heat and dust of an election has died down, the teething troubles of a new government (hopefully) abated and a slew of new policies announced, it is perhaps legitimate to ask two sets of questions of the elected incumbent. First, what are its achievements on the ground? How many of the election promises have translated into concrete action?
The answer to this question has been debated by many analysts, including at least a couple of columnists in this paper.
The second set of questions that one might ask is whether the government has put its own stamp on public policy issues or simply mimicked its predecessor.
Let me begin with fiscal policy. After a period of an acute fiscal overrun between 2010 and 2013 that happened partly in a bid to fight the effects of a slowdown that followed the great financial crisis of 2008, the United Progressive Alliance (UPA)-II government made a desperate effort to rectify its image both with foreign investors and the international credit rating agencies.
Unfortunately, it indulged in what could be characterised as the most naïve caricature of fiscal fundamentalism - that of promising to produce a particular Budget deficit-to-national income ratio at any cost.
Little effort was made to raise issues of the state of the business cycle, its impact on tax collections and the myriad ramification of tightening expenditure too much in the middle of a major economic slowdown.
While the government's marksmanship in hitting the fiscal bullseye every year seemed perfect, the numerous fiddles that went into producing this number were all too clear.
Subsidy payments were delayed, critical capital spending was abandoned, tax refunds were pushed back, and so on and so forth.
....................................
My biggest concern is the rising share of bad loans in the banking system and the sooner we have a resolution mechanism where errant borrowers and lenders thrash out a deal, the better.
I am yet to see the nitty-gritty of either the "Make in India" campaign (in terms of ease of doing business) or the nuances of "cooperative federalism".
I find the term "big bang" abhorrent in the context of reforms - but could certainly do with more "aggressive incrementalism".
The writer is chief economist, HDFC Bank. These views are his own
Decoding Modi govt's economic priorities - Rediff.com Business
The answer to this question has been debated by many analysts, including at least a couple of columnists in this paper.
The second set of questions that one might ask is whether the government has put its own stamp on public policy issues or simply mimicked its predecessor.
Let me begin with fiscal policy. After a period of an acute fiscal overrun between 2010 and 2013 that happened partly in a bid to fight the effects of a slowdown that followed the great financial crisis of 2008, the United Progressive Alliance (UPA)-II government made a desperate effort to rectify its image both with foreign investors and the international credit rating agencies.
Unfortunately, it indulged in what could be characterised as the most naïve caricature of fiscal fundamentalism - that of promising to produce a particular Budget deficit-to-national income ratio at any cost.
Little effort was made to raise issues of the state of the business cycle, its impact on tax collections and the myriad ramification of tightening expenditure too much in the middle of a major economic slowdown.
While the government's marksmanship in hitting the fiscal bullseye every year seemed perfect, the numerous fiddles that went into producing this number were all too clear.
Subsidy payments were delayed, critical capital spending was abandoned, tax refunds were pushed back, and so on and so forth.
....................................
My biggest concern is the rising share of bad loans in the banking system and the sooner we have a resolution mechanism where errant borrowers and lenders thrash out a deal, the better.
I am yet to see the nitty-gritty of either the "Make in India" campaign (in terms of ease of doing business) or the nuances of "cooperative federalism".
I find the term "big bang" abhorrent in the context of reforms - but could certainly do with more "aggressive incrementalism".
The writer is chief economist, HDFC Bank. These views are his own
Decoding Modi govt's economic priorities - Rediff.com Business
