 |
| The Fisc-balance |
Last week, Kelkar Commitee on Fiscal Consolidation said that 'The Indian Economy is presently poised on the edge of a Fiscal Precipice'.
It also prescribed few medicines to the said illness - slew of measures, government must execute, to improve the GDP growth and better the health, of the economy.
Now, as we know, the metrices of GDP, are tracked by a 'tiny' equation:
Y=C+I+G+X-M
(where , Y: Nation's GDP, C: Consumption Expenditure, I: Investment Expenditure, G: Government Expenditure, X: Exports, M : Imports.)
At the outset, it's fair to acknowledge -- that we can balance the weakening GDP by - reducing subsidies, increasing Government expenditures (in infrastructure and other investments), streamlining tax policies (in order to collect taxes from wider population), motivating consumers to spend more, improving our Forex reserves (by ramping up Exports) and so on...But where emphasis is required most, is on -- "execution".
After all, the proof of the pudding is in the eating.
Information technology can play a very crucial role here, in improving our execution capabilities. Government is not able to reach to wider sections of population to collect taxes. Only around 2% of folks pay taxes. Whatever little money this may amount to, Government uses portion of these taxes for nation building. But then, not all of money reaches the other end of the supply chain. Lots of public money gets wasted during the national production cycle. Historically, indian Public Distribution System (PDS) has been performing more like the Power Transmission companies. Just the way much of the Electric power generated, gets lost in transmission, the same way much of the public money is siphoned of during the distribution process.
We need to plug these leakages, to reduce Fiscal Deficit.
There is this urgent need, to implement Electronic Payments for all the Government Transactions. This will reduce the cash usage in the economy. Which in turn will enhance transparency & accountability and reduce corruption. It would be possible for the Government to do a hands on analysis of its Fiscal balance by predicting and collecting revenues on one hand and managing expenditures on the other hand. Also it would help the government improve its PDS process and in running its flagship schemes such as MGNREGA effectively.
'Aadhar' can be an important vehicle, through which these government transactions can be routed.
Now, as we know, the metrices of GDP, are tracked by a 'tiny' equation:
Y=C+I+G+X-M
(where , Y: Nation's GDP, C: Consumption Expenditure, I: Investment Expenditure, G: Government Expenditure, X: Exports, M : Imports.)
At the outset, it's fair to acknowledge -- that we can balance the weakening GDP by - reducing subsidies, increasing Government expenditures (in infrastructure and other investments), streamlining tax policies (in order to collect taxes from wider population), motivating consumers to spend more, improving our Forex reserves (by ramping up Exports) and so on...But where emphasis is required most, is on -- "execution".
After all, the proof of the pudding is in the eating.
Information technology can play a very crucial role here, in improving our execution capabilities. Government is not able to reach to wider sections of population to collect taxes. Only around 2% of folks pay taxes. Whatever little money this may amount to, Government uses portion of these taxes for nation building. But then, not all of money reaches the other end of the supply chain. Lots of public money gets wasted during the national production cycle. Historically, indian Public Distribution System (PDS) has been performing more like the Power Transmission companies. Just the way much of the Electric power generated, gets lost in transmission, the same way much of the public money is siphoned of during the distribution process.
We need to plug these leakages, to reduce Fiscal Deficit.
There is this urgent need, to implement Electronic Payments for all the Government Transactions. This will reduce the cash usage in the economy. Which in turn will enhance transparency & accountability and reduce corruption. It would be possible for the Government to do a hands on analysis of its Fiscal balance by predicting and collecting revenues on one hand and managing expenditures on the other hand. Also it would help the government improve its PDS process and in running its flagship schemes such as MGNREGA effectively.
'Aadhar' can be an important vehicle, through which these government transactions can be routed.
No comments:
Post a Comment