Do we need for more stimulus Package?
Focus on execution and efficiency
India is probably running a very large stimulus package considering the problems it is facing vis-à-vis high fiscal deficit. High public debt and historically large fiscal deficit have stretched our public finances. While it is important to reduce the short-term pain of lower growth, it cannot be at the cost of high inflation, lower growth or both in the future. The fine balance required to manage prudence and stimulus is something which will be difficult to expect from a poll-bound government but not much from the seasoned regulators.
India will also face the head wind of drop in future savings rate as government turns from saver to spender. It also needs to keep in mind that FY09 growth to some extent is front-ended by its stimulative policy aka high fiscal deficit. The back-ended price for the same needs to be kept in mind.
The government needs to focus on execution and efficiency. It needs to get bigger bang out of every buck that it is spending. Instead of spending money it needs to invest money wisely. Building check dams improves water level and helps in improving agriculture yield.
Building kuccha road that exists only on map or will get washed away in monsoon doesn’t help any one. The government needs to attract capital flows into the country to augment shortfalls in savings which is so necessary to maintain investment and consequently the growth momentum. Our policies and execution need to be benchmarked against, say, Chinese standards and attempt should be made to outperform them.
Maintaining public finance under check will be a critical factor in generating investor confidence. Divestment, efficient tax collection, subsidy rationalisation and aggressive push to cut cost and wasteful expenditure are something which the government should implement on a priority basis. In an uncertain environment, it is critical to keep investor confidence high.
If the government can stop contradictory communication from different heads, it will boost investor confidence. While there is a cost for financial stimulus package, there is only gain from the above referred alternative package. It will just require a nation to work together to overcome current tough environment.
___ Fiscal stimulus packages by the Govt of India to specific sectors including the Real Estate,is liable to be misused by the recipients.Over- generous pumping of public funds into selective sectors without their taking appropriate cost-cutting measures and enhancing efficiency,is meaningless. There is an imperative need to maintain surveillance on realtors so that the beneficiaries do not go the Satyam way!Fiscal stimulus does not mean fiscal irresponsibility
Source : ET & ICICI
India is probably running a very large stimulus package considering the problems it is facing vis-à-vis high fiscal deficit. High public debt and historically large fiscal deficit have stretched our public finances. While it is important to reduce the short-term pain of lower growth, it cannot be at the cost of high inflation, lower growth or both in the future. The fine balance required to manage prudence and stimulus is something which will be difficult to expect from a poll-bound government but not much from the seasoned regulators.
India will also face the head wind of drop in future savings rate as government turns from saver to spender. It also needs to keep in mind that FY09 growth to some extent is front-ended by its stimulative policy aka high fiscal deficit. The back-ended price for the same needs to be kept in mind.
The government needs to focus on execution and efficiency. It needs to get bigger bang out of every buck that it is spending. Instead of spending money it needs to invest money wisely. Building check dams improves water level and helps in improving agriculture yield.
Building kuccha road that exists only on map or will get washed away in monsoon doesn’t help any one. The government needs to attract capital flows into the country to augment shortfalls in savings which is so necessary to maintain investment and consequently the growth momentum. Our policies and execution need to be benchmarked against, say, Chinese standards and attempt should be made to outperform them.
Maintaining public finance under check will be a critical factor in generating investor confidence. Divestment, efficient tax collection, subsidy rationalisation and aggressive push to cut cost and wasteful expenditure are something which the government should implement on a priority basis. In an uncertain environment, it is critical to keep investor confidence high.
If the government can stop contradictory communication from different heads, it will boost investor confidence. While there is a cost for financial stimulus package, there is only gain from the above referred alternative package. It will just require a nation to work together to overcome current tough environment.
___ Fiscal stimulus packages by the Govt of India to specific sectors including the Real Estate,is liable to be misused by the recipients.Over- generous pumping of public funds into selective sectors without their taking appropriate cost-cutting measures and enhancing efficiency,is meaningless. There is an imperative need to maintain surveillance on realtors so that the beneficiaries do not go the Satyam way!Fiscal stimulus does not mean fiscal irresponsibility
Source : ET & ICICI
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