Chapter 1:ECONOMIC OUTLOOK, PROSPECTS AND POLICY CHALLENGES
have improved in India and this can be seen even in cross
country comparisons. Inflation is low, CAD is drastically
reduced and foreign investment has increased. India's Revenue to
GDP ratio is 19.5% as per IMF and needs to move to 25% which is
ideal for Asian economies.
reforms of the government are deregulation of diesel prices
which led to new investments in this sector, raising gas prices
to $5.6 per million BTU which provided incentive for greater gas
benefit transfer for cooking gas consumers, auction of coal
mines, auctioning of mines for minerals, G.S.T bills, taxing
coal and diesel, increased F.D.I limits and Aadhar backed
subsidy transfer led to reforms.
bureau statistics show that the rural wage growth has been
declining since 2011. RBI conducted surveys on household
inflation expectations has also been consistent with it.
sector needs to focused on by targeted subsidies and phasing out
distortion causing subsidies. The 41% of total area under
agriculture is un-irrigated. I.C.A.R which is the apex
organization for agriculture based research, education and
extension needs to be revamped and probably these three roles
need to be separated.
strengthening of the forward market commission is being done by
merging it with S.E.B.I and this will help farmers discover
prices of commodities in advance and help them reach hedge price
should ensure that the fiscal deficit should be restricted to 3%
of GDP. This should be backed by Zero Revenue deficit and ensure
that borrowing should be only for capital formation.
also intended for the poor are cornered by the relatively
wealthy due to not being targeted effectively. The water
subsidies are taken by the relatively rich private taps then the
public taps. The subsidy on fertilizers also benefit the firms
than the farmers. The subsidy on electricity benefit the
wealthier households. Subsidy on freight rates are insufficient
as they are the highest in the world due to cross subsidization
of passenger fares.
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