‘The recently introduced economic reforms are moves in the right direction’
The Indian economy should be back to achieving 9 per cent growth in three years’ time, Chief economist of the World Bank and former Chief Economic Advisor to the Union Finance Ministry Kaushik Basu has predicted.
“Fortunately, there is a lot of activity that we are seeing in India. Growth-wise, the next two years will be difficult for India only because there is a little bit of a momentum of slowdown and more importantly the European crisis is affecting the whole world,” Dr. Basu said here on Wednesday at the inauguration of the India Finance Conference 2012.
Speaking about the introduction of foreign direct investment (FDI) in multi-brand retail, Dr. Basu said the biggest beneficiary of the initiative would be farmers while consumers would also benefit.
When asked if the autonomy given to States to decide whether or not FDI in multi-brand retail would be implemented in the respective States would give rise to disparities, he said that it was possible but the situation would be “almost a laboratory experiment.”
“I understand that different States take different views on it (FDI) and some are hesitant…In a few years we will see whether the States allowing FDI are doing well or badly. If we see that they are doing well then presumably states that were hesitant earlier will open up. If we see that they are doing badly then that would be a lesson for everyone,” he told journalists on the sidelines of the event.
Higher inflation
On being asked if the country should settle for a higher inflation rate, Dr. Basu said if the economy continued to grow at a higher rate of growth, inflation could be kept at 5 or 6 per cent.
“You can never take a policy decision that we are going to agree to live with higher inflation….But if the growth is real growth meaning that there is actually more food, more clothing, more everything being produced, you are getting a cushion against that,” he said.
Keywords: direct cash transfer scheme, Kaushik Basu, India Finance Conference 2012, Higher inflation, multi-brand retail
When did India become a Welfare state?
Direct Cash transfer makes no sense as nobody knows what the money is going to be spent for after money is received?
There is no means to monitor the cash flow. We may not know whether its a bribe or Cash for Vote.
Let me say if a Family needs Gas and goes and buys one and then tries to reimburse from govt, who will approve? When there is approval there is bribe and digitally its easy to erase proof of such Mal-practice. How will we make sure that direct cash transfer will substitute subsidy? As there is no surety that cash will reach the needy and it will be claimed as a Subsidy. there by in market all essentials will be sold at elevated price. Only Middle men and corporate/FDI will gain. This also requires huge E-Commerce establishment. Seems like an effort to make India a big International Market by increasing buying power.This is also going to make people lazy as they get money without work.
well said. But still it's an acid test to the idea( direct cash transfer)itself, for which precautions must be placed in heavy ways. And that's the problem. It's not clear what the precautions are. Govt must not play game with the vulnerable.
Mr.Basu would have used a better word than 'Game changer' which is allergic and often used by incompetent politicians.
How this scheme can be game changer as there is no clear BPL list in
the country and in most of the state needy families are excluded by
corrupt practices. At village level powerful and elite class introduce
their names in the list. In this context, there should be stringent
punishment whoever take benefit by corrupt practices jeopardizing the
genuine beneficiary. Moreover without study of fact and infrastructure
needed for the scheme, the government is very keen to introduce this
scheme only for political gain. In exigency same thing would happen as
happened with the PDS.
It is surprising to note that till date none in the government or
the RBI or the World bank, including This Mr.Basu, has advocated a
similar direct cash transfer instead of subsidised diesel.It is
much easier to ensure bank accounts for diesel consumers than PDS
beneficiaries.
Direct cash transfer instead of subsidiesed Diesel will be the real
game changer in the transport sector and the Import - Export
equation.
Please advise the governemtn that food subsidy also be given in cash rather than food through PDS which have limited efficiency and effectiveness.
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