Sunday, February 7, 2010

R.Kannan, Mumbai

From: Kannan Rajarathnam <rajakannan@rediffmail.com>
Date: Sun, Feb 7, 2010 at 2:05 PM
Subject: Dream Budget - F 11
To: BudgetTwentyTen@gmail.com
Cc: rajakannan@rediffmail.com


Dear Sir,

I am forwarding my thoughts for publishing.

Thanking you and with regards,

Union Budget – F11

The Stimulus by the government has helped to a achieve higher level of economic growth. But inflation could have been kept at a lower level by better demand supply management. The recent initiative by the Central government to co-orindate with the state governments to bring balance in the demand supply is in the right direction.

GDP growth in the first quarter this year was at 6.1%, second quarter was at 7.9% and in third it is likely to be in the range of 8.2 – 8.5%. If we can end the year with a quarter growth of 8.5 – 9.5%, the overall growth for the year could be closer to 8% for the whole year.

Despite greenshoots emerging, there are sporadic reporting of failures of economic systems in a few countries which have an impact on the world Economy. Since India's economy is more integrated with the global economy than in the past , withdrawal of stimulus has to be handled with caution.

The Budget should focus on growth and there is a need to continue the stimulus and the government should continue the stimulus in sectors which have a greater impact on consumption, investment and higher multiplier effect on the Economy.

The withdrawal should be gradual and we have to prepare a phased plan for withdrawal. We have to identify economic indicators with the target for key indicators and once the target is reached then the corresponding stimulus could be withdrawn. The targets will have corresponding action plans for Finance ministry, Commerce Ministry, RBI and SEBI. A road map could be drawn up for withdrawal of stimulus on the above lines.

The concern regarding the budget deficit could be addressed through raising funds through unconventional measures including Capitalising the land bank of the government and government enterprises in a big way. China had resort to this strategy in a big way at the State and Central levels in a big way in the last year.


R.Kannan
Mumbai
9869714923
indiaat10.blogspot.com

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