Source: The Hitavada      Date: 20 Dec 2017 11:48:52










LIKE several international agencies and the International Monetary Fund (IMF), the United Nations too believes that India has the potential to grow at the rate of 8 pc for the next two decades. But for that, the UN’s latest report says, the country has to unleash a few more remaining reforms. The United Nations acknowledges with a positive outlook the reforms and financial and monetary policies that the country has undertaken. 

Now the world body wants India to unravel remaining reforms to realise its full potential. The stress is especially on promoting private investment and improving living conditions of the population. Indeed both these issues have a huge bearing on the economy regaining its earlier growth path. While the Government has taken the initiative to raise its investment in infrastructure projects for economic activity to pick up, the worrisome part is the sluggishness in private investment.

Of course unless private consumption picks up and so does the demand, there will be no incentive for private corporates to commit more investment. And for that, as suggested by the UN economic expert and which is accepted universally, living standards of the entire population have to be raised.
For that incomes have to rise. That again will depend on how employment creation pans out in urban, semi-urban and rural areas. These are issues that are so much dependent on the economic policies and related reforms that the Government may unveil in the next few months.

The UN economist has appreciated India’s fiscal policy as also the monetary stance of the Reserve Bank of India (RBI) as prudent. The RBI in fact, at times, had to take a different view from the Government on the issue of the lowering of interest rates for reducing borrowing costs and incentivise private investment. It is more concerned with the volatility in consumer inflation that has bearing on the lives of the common man. For that the apex bank has to ward off huge pressure from time to time.

And these concerns of the apex bank are not entirely out of place. With vegetable prices showing no signs of moderating and international oil prices resuming a rising trend, the RBI’s caution seems to be justified. But there is escape from reforms.