India’s fear of a fiscal failure has to do with sidelining of institutions: Expert
The financial health of a nation has to be guided by facts and figures.
Is the country staring at a silent fiscal crisis? If you remain unconvinced, a member of Prime Minister Narendra Modi’s Economy Advisory Council (EAC-PM) is now openly saying that it is time that the government releases a white paper on its medium-term targets in order to dispel the apprehensions surrounding the economic climate in the country.
Dr Rathin Roy, who is with the government’s apex advisory group, has been vocal about his views concerning the economy. On multiple forums and in his newspaper columns he has said that the current problem of the Indian economy is deep-rooted and that the problem is with the collection of GST. He clearly says the real GDP growth is around 3% and not even 5% as reported for the first quarter of this financial year.
Commenting on the observation of the member of the PM’s EAC, experts feel that the problems highlighted by Roy are evident and it has to with the failure of the government to give space and due credence to the institutional data and inferences.
“What has happened in the last six years is the sidelining of the institutions which bring out credible data for the policymakers to follow. Somehow, the due importance which were earlier given to ground observations and reports are no more in place. The results are for everyone to see. Economy can be driven by the statement and like of few individuals. The financial health of a nation has to be guided by facts and figures,” Vijay Sardana, Member, Commodity Derivatives Advisory Committee, Securities and Exchange Board of India (SEBI) told Asiaville.
All economies which are leading today, whether it is the United States or China, have based their economic decisions on strong fundamentals which are derived by an elaborate process of study and consultations, he adds.
Roy, who is also the director of the National Institute of Public Finance and Policy, has said that India was staring at a silent fiscal crisis and it has to do with the shortfall in tax revenues. He had been vocal against several steps of the government. He had said that the government should not issue foreign sovereign debt without getting into larger public consultations after the budget announcement recently.
Finance Minister Nirmala Sitharaman, in her maiden Budget speech in July, had announced that India’s sovereign external debt to GDP is among the lowest globally at less than 5 per cent and the government would start raising a part of its gross borrowing programme in external markets in external currencies. However, the government has not yet gone ahead with the plans owing to criticism from several quarters.