Triple FIVE is more powerful than Triple ACE in the game of Macro Economics: We realized that the Indian growth story was lifted by easy global monetary accommodation, a phenomenon of “a rising tide lifting all boat” rather than an exception. The country grew at 8.8% CAGR just a percent more than Emerging Markets (comprising of 150 countries in this category) during Year 2003-2008. As the blip fades, a generation is waking up to a cocktail mix of a five percent GDP growth rate, a five percent current account deficit and a five percent fiscal deficit. Prolonged mis-governance, severe underinvestment in physical and social infrastructure, Years of misallocation of the country’s resources disguised as uplifting the poor, has created a persistent high fiscal deficit, an irreversible process. The fiscal policies like farm waiver loan, huge pay hikes for government employees, MNERGA to upcoming Food Security Scheme are biased towards consumption purposes rather than productive one. This distorted policy structure ensures that subsidies remain high and all the attempts towards fiscal consolidation look a very distant dream. Today, subsidies accounts for 42% of Gross Fiscal Deficit exactly double of the size of a decade ago.
Posted on: Mon, 16 Sep 2013 09:51:31 +0000
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