Somanathan urges reform of poorly targeted subsidies to spur growth
Union Finance Secretary TV Somanathan on Saturday stressed the need for fiscal discipline to boost the economy and suggested reforms in poorly targeted subsidies provided for power and fertilizers to improve the quality of public expenditure.
“First and foremost, the state and central governments need prudent and conservative fiscal policies, this is absolutely vital, if we are to survive and do well,” said Mr. Somanathan on ‘India in India’ XVI CUB V. Narayanan while delivering the Memorial Lecture. The emerging global economic structure’.
He also emphasized the importance of reducing the fiscal deficit, especially at the central level, by reducing external debt as well as promoting a strong domestic investment climate.
“We need to improve the quality of our public expenditure with a greater share for those aspects of public expenditure that help fuel growth. To do this, we need to reform poorly targeted subsidies such as electricity and fertilizers. Without which we cannot improve the quality of public expenditure. There are no quick fixes and quick lunches. This needs to be done. It calls for introspection,” he said.
Stating that if India continues to grow at 6% to 7%, it will be far ahead of many countries globally, Mr. Somanathan said, “We just have to make sure that we don’t do anything bad. . We will improve because others are getting worse. We have the opportunity to shape emerging architecture.”
“If India wants to play a really important role in shaping the emerging global economy, the most important challenge is on the domestic front. If we do not have a strong domestic economy, we cannot shape the global order.
Presenting a bright future, he said there were some early indications of a potential role in new and emerging architectures such as international solar energy, which was going to be one of the major energy sources of the future. Importantly, the International Alliance was headquartered in India, he said.
Talking about India’s leadership in developing world-class technologies like Unique Identification and Unified Payments Interface (UPI), he said, “We are ahead of the developed countries and not the developing countries; Unique Identity has been given to many developed countries by UIDAI. On being advised.
He also referred to the ongoing balance of payments crisis in Sri Lanka and said that it pointed to the diminishing role of the International Monetary Fund.
“To date, the role of the two countries, China and India in Sri Lanka’s economic crisis and its solution, has been much greater than this” [that of the] The IMF may change this. The situation is that the multilateral institutions that were the pillars of the 1944 order are no longer driving the change. This is a change and it can be seen clearly.”
He concluded by saying that India needs to emulate Singapore and Dubai on ease of doing business, pursue scientific and technological innovations like the US, adopt the quality focus and work ethic of the Japanese to become a global economic power. The goal is to match the building skills of the Germans and work to ensure the quality of life of the Scandinavians.