10-01-2006, 11:20 PM
<!--QuoteBegin-->QUOTE<!--QuoteEBegin--><b>India 8.9 </b>
The Pioneer Edit Desk
Imagine GDP rise with reforms
The scorching 8.9 per cent growth in the Indian GDP in the first quarter of 2006-07 is a tribute to what the enterprise and genius of this country can achieve even in the near absence of economic reforms. Combined with the increased overseas investment by Indian business houses - outgoing FDI, as it were, has crossed incoming FDI this year - the 8.9 per cent figure will only bolster the bullish, optimistic mood of business and economy stakeholders<b>. It has often been said that India can achieve 12 per cent growth rate, and consistently, with the right mix of reformist policies </b>- the sort Finance Minister P Chidambaram has pleaded with the Left and with UPA allies for room for. The prospect of that has never looked more inviting; if nine per cent is the new 'neo-Hindu' growth rate, and the baseline mark, the future is India's to imagine. The long-term rise of the Indian economy is now beyond question; <b>yes, there will be hiccups along the way but a dramatic decline now looks more and more unlikely. It can be the product of only freak events or a colossal failure of policy management. There is convenient shorthand for this: It's called fiscal deficit</b>.
The figures Mr Chidambaram provided are chilling. Sixty per cent of the 2006-07 fiscal deficit target - high anyway, at 2.1 per cent of GDP - was reached in the first five months of the year itself. <b>Manic social spending is a recipe for fiscal profligacy; it adds to money supply but not productivity - and so pushes up prices and inflation, too. The waste called the rural employment guarantee programme, which will satisfy only armchair socialist fantasies and enrich local henchmen of the ruling party/coalition across States, <span style='font-size:14pt;line-height:100%'>giveaways to minorities and other specialist interest groups; the strengthening of subsidy raj; dollops of populism in the run-up to State elections in 2007 - this is the stuff of a fiscal nightmare</b>. </span>Some of it can be paid for by even higher economic growth, but this will necessitate more reform. The Finance Minister has spoken of the need to further open up the financial sector. Other examples are possible. Take higher education - to pay for the reservation regime inflicted upon the country by HRD Minister Arjun Singh, the Government will have to add seats, faculty, hostel rooms by the thousands in the next two or three years. If it opens up higher education to private/foreign investment, much of this burden could be passed on to the private sector. Mr Chidambaram probably knows that anyway. He needs to just act, never mind the prickly fellow travellers. After India has given him 8.9 per cent growth, he has a moral obligation.
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The Pioneer Edit Desk
Imagine GDP rise with reforms
The scorching 8.9 per cent growth in the Indian GDP in the first quarter of 2006-07 is a tribute to what the enterprise and genius of this country can achieve even in the near absence of economic reforms. Combined with the increased overseas investment by Indian business houses - outgoing FDI, as it were, has crossed incoming FDI this year - the 8.9 per cent figure will only bolster the bullish, optimistic mood of business and economy stakeholders<b>. It has often been said that India can achieve 12 per cent growth rate, and consistently, with the right mix of reformist policies </b>- the sort Finance Minister P Chidambaram has pleaded with the Left and with UPA allies for room for. The prospect of that has never looked more inviting; if nine per cent is the new 'neo-Hindu' growth rate, and the baseline mark, the future is India's to imagine. The long-term rise of the Indian economy is now beyond question; <b>yes, there will be hiccups along the way but a dramatic decline now looks more and more unlikely. It can be the product of only freak events or a colossal failure of policy management. There is convenient shorthand for this: It's called fiscal deficit</b>.
The figures Mr Chidambaram provided are chilling. Sixty per cent of the 2006-07 fiscal deficit target - high anyway, at 2.1 per cent of GDP - was reached in the first five months of the year itself. <b>Manic social spending is a recipe for fiscal profligacy; it adds to money supply but not productivity - and so pushes up prices and inflation, too. The waste called the rural employment guarantee programme, which will satisfy only armchair socialist fantasies and enrich local henchmen of the ruling party/coalition across States, <span style='font-size:14pt;line-height:100%'>giveaways to minorities and other specialist interest groups; the strengthening of subsidy raj; dollops of populism in the run-up to State elections in 2007 - this is the stuff of a fiscal nightmare</b>. </span>Some of it can be paid for by even higher economic growth, but this will necessitate more reform. The Finance Minister has spoken of the need to further open up the financial sector. Other examples are possible. Take higher education - to pay for the reservation regime inflicted upon the country by HRD Minister Arjun Singh, the Government will have to add seats, faculty, hostel rooms by the thousands in the next two or three years. If it opens up higher education to private/foreign investment, much of this burden could be passed on to the private sector. Mr Chidambaram probably knows that anyway. He needs to just act, never mind the prickly fellow travellers. After India has given him 8.9 per cent growth, he has a moral obligation.
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