India's economy is going all guns blazing, no doubt. Its GDP reportcard may well give its western counterparts a complex. Compare it to other emerging nations, the halo just gets bigger. But amid all this, there are some stark truths that hit you in your face and threaten to pull the India story down. Organisation for Economic Cooperation and Development's (OECD) Economic Survey of India, which was presented in New Delhi on Tuesday, is basically an attempt to cut through the clutter and offer prescriptions to all those ills faced by our economy.
According to the report, a double-digit growth that is sustainable and socially inclusive will be well within reach if right policies are pursued. Presenting the survey, OECD Secretary-General Angel Gurra said: "Policymakers are to be commended on the remarkable catch-up achieved in recent years, making India one of main driving forces of the global economy... The priority given to more socially inclusive economic growth is appropriate and further reforms are needed to achieve it."
To keep the momentum going, OECD's proposal is rather simple: target public expenditure better on the poor. It has a feeling that the progress could have been much faster though there has been a marked decline in the rate of poverty. Against this backdrop, the report advocates a strengthened welfare system and improved access to health care. It also calls for better regulation and oversight.
Education remains the top priority for the central as well as many state governments, and enrolment continues to grow fast. But high drop-out rates and low attendance continue to spoil the show. The report bats for more effective government regulation and funding to stem the rot. Incentives and professional development opportunities for teachers and student loans for higher education could do wonders, it feels.
The report also brings up the issue of subsidies failing to reach their intended target groups. Phasing out those for diesel, it suggests, could make some sense in the long term. As for other energy products such as kerosene and LPG, the survey talks about subsidies being converted into cash payments targeting the needy. The implementation is key here as the universal identity number will help facilitate speedy processing for the payment.
OECD is upbeat about the planned introduction of a nation-wide goods and services tax and thinks that a wider base will help in order to keep the overall rate low. Further fiscal consolidation is due, making more funds available for private investment. Less paperwork for businesses and a hassle-free environment for trade and investment are expected to benefit both companies and households. The report also notes that while steps have been taken to improve infrastructure, greater investment in this area is necessary to lift growth.
Bolstering the financial system and promoting access to financial services is another area that OECD feels should get its due share of attention from policymakers. Reason: millions of Indians, according to the report, still lack bank accounts though microfinance is slowly but gradually gaining currency.
Published Date: Jun 14, 2011 03:30 pm | Updated Date: Dec 20, 2014 05:05 am