Fiscal Policies Are Relevant In India Presentation

Business Environment Fiscal Policies are Relevant in India

Presented By: Jay Sharma Ravi Solanki Mitali Patel Mittal Patel

Agenda • Introduction • Structure • Strategies • Statistical Data • Recommendations

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Origin

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History

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LPG Model • Liberalization • Privatization • Globalization

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Objectives • • • • • •

Achieve Desirable Price Levels Achieve Desirable Consumption Level Achieve Desirable Employment Level Achieve Desirable Income Distribution Increase in Capital Formation Degree of Inflation

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REVENUE

DEFICIT

FISCAL FACTORS

EXPENDITURE

OUTPUT AND EMPLOYMENT

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Statistical Data

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Major Achievements • 12th Largest Economy in the World as per GDP in US Dollars • 3rd Largest Economy in the World as per GDP in US Dollars (Purchasing Power Parity) • 2nd Fast Growing Major Economy @ 9.2 % • Trillion Dollar Economy

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Pros & Cons of Fiscal Policy • Pros: – – – – – –

Highly Acceptable for Developing Countries. Emphasis on Overall economic Growth. Takes care of Revenue and Expenditure Helps in Planning Easy to target specific sector For the Social Welfare

• Cons: – Subject to Time Lags – Corruption

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Pros & Cons of Monetary Policy • Pros: – Regulates Money Supply – Controls Interest Rate

• Cons: – – – – –

Basically meant for Capitalistic or Developed Country Banking Infrastructure is Pathetic Restricted to Money Matters Takes care of only monetary measures Uncertainties is very High

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Challenges • Systemic

Reform is Complex and Difficult, even when

done Piecemeal.

• Diversity and Regional Inequality create Political Hurdles and Exacerbate Internal Political Tensions

• Need to Build New Political Coalitions for Governmental Reforms.

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Challenges • Several other Simultaneous Developments Heighten the Challenges:

• Major Local Government Reform. • Liberalization and move away Intervention,

including

from

Re-evaluation

of

Govt. Govt.

Economic Planning.

• Red Tape

& Corruption.

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Recommendations TAX REFORMS • Coordinated Tax Reform Required: • Jurisdictions: States and Center have to work together • Taxes: Could have Piggy Backing of States on Income Tax, with Distinction between Agricultural and Non-Agricultural income removed

• New Measures on Services Tax are Retrograde: • Shift Tax Power to Center.

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Recommendations • • • • • • • • • •

Reduce the corruption Level Reducing the Past Borrowings Mitigate the Interest payment on Debt. Keeping regular check on Policy Implementation Balancing the Current A/c & Capital A/c Deficit. Generating the Foreign Exchange Reserve. Improvement in Infrastructure Disinvestment in PSUs Investment in Priority Sectors first. Reducing the red tapism from Government Sectors

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THANK YOU

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