Govt needs to downsize to balance income & expenditure: Prof Nayyar
By TIOL News Service
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NEW DELHI, APRIL 09, 2018: THE NITI Aayog Vice Chairman, Dr Rajiv Kumar, yesterday spoke out on the need for a rational fiscal policy. According to Dr. Kumar, macro-economic policy in India needs to be counter-cyclical. He felt that while the Fiscal Responsibility and Budget Management Act did have a role to play in discouraging short-term populist measures and promoted fiscal discipline, there was also no need to be concerned about borrowing that finances long term capital expenditure.
He was of the view that certain expenditure such as those for health and education could be viewed as capital expenditure as they promote productivity gains in the long run. He felt that the focus should be more on the efficiency of public spending and performance based measures needed to be built in.
In his address, Prof. Soumitra Dutta, Professor of Management and Former Dean, S C Johnson College of Business, Cornell University highlighted that Indian government’s expenditure was rising faster than its income. Over the past 40 years, India’s expenditure was rising at the rate of 6.0% p.a. while it’s income was rising by 4.6% p.a. He felt that there was a need to undertake deep structural reforms to correct this situation. He felt that the best way to address this imbalance was to promote rapid industrial growth in the country.
Prof. Deepak Nayyar, Emeritus Professor of Economics, Jawaharlal Nehru University, Professor of Economics, New School for Social Research, New York and former Vice Chancellor, University of Delhi stated that there was a need to downsize government to balance income and expenditure. He felt that while government would find it difficult to widen the tax base in the country, the only option open to it was to cut expenditure and the only way to do that was to downsize the government.
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