Financial Daily from THE HINDU group of publications
Tuesday, May 18, 2004
Industry & Economy
`Fiscal empowerment crucial for growth'
Dr Bimal Jalan, former RBI Governor, with Mr Y.K. Modi, President, FICCI, at a meeting on "Economic agenda for the new Government" in the Capital on Monday. Kamal Narang
New Delhi , May 17
IT is possible to look at the pace and content of disinvestments differently, Dr Bimal Jalan, MP and Former Governor of Reserve Bank of India, said while addressing the Federation of Indian Chambers of Commerce and Industry (FICCI) National Executive Committee members on `Economic Agenda for the New Government', here today.
"But there can be no different view on the point that people's money cannot be spent in financing deficit or losses. In this case, one has to keep the element of reasonableness in mind," he pointed out.
Further, on the issue of fiscal empowerment, Dr Jalan said that it might take 5 to 10 years time to achieve this. He underscored the need to open up five to six major fronts in the area of public policy `where we need to move very quickly'.
Highlighting the critical need for fiscal empowerment wherein the Government will have the ability to do things which it must do, he said since India stands at a threshold where it has immense economic resilience, is self confident and has adequate competitive strengths, fiscal empowerment will enable the Government to take right steps for overall growth with equity.
Further, he said that since there is no tension between markets, government and public investments , it is important that criticality of fiscal empowerment is understood without `which we cannot grow'.
Dr Jalan said, "I believe today India is in a position to do what it wants to do. If we want best of anything - airports, roads, ports, etc, we can have it because today we do not have resource crunch of any kind".
Resources are enough. Only concern is its proper allocation.
"We want high growth with better equity, strong infrastructure, BSP - (bijli, sadak, pani) financial stability, low inflation, strong markets, better public delivery system and lower administrative costs".
It is notable that comparative advantage of nations depends on skills, he said. Dr Jalan underscored the need for low-cost competitive environment, which will spur growth.
He said, "We need corporate governance and greater accountability from our industry. The need for drastically reducing corruption must be emphasised".
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