As per latest reports from Press Trust of India, Reserve Bank of India has come up with a new India economic policy whereby it would be relaxing its money supply activities. It has also said that its economic policy of India would be successful to help this country recover fiscally by 2011 only.
However, there is a pre-condition for this situation to be realized. This economic policy in India would be able to bear fruit provided other advanced economies of world are able to recover from aftereffects of global financial meltdown.
Pranab Mukherjee, Indian finance minister has said government has adopted an economic policy at India of borrowing. However, he also reiterated that if amount of public expenditures increase it would have a significant bearing on India’s economic policy.
In recent times many a Indian economic policy have been formulated whereby three back to back economic stimulus packages have been provided to weaker sections of Indian economy. However, such India economic policies have only led to increasing of financial deficit.
Pranab Mukherjee also said that he is sure that Reserve Bank of India would be adopting right economic policy for India in order to address economic imbalances persisting at present. As per his observations, prime lending rates being charged by banks belonging to public sector were a bit higher than what is desirable in present circumstances.
An important part of India economic policy of national government is bringing back confidence of business establishments in India financial system. This is especially true of services sector of Indian economy.
As per latest India economic policy, economy would be moving towards a single goods and service tax by doing away with differences between rates of service taxes and CENVAT. In interim budget for fiscals 2009-10 service taxes and excise duties have been reduced.
According to this India economic policy a significant amount of money would be lost as a result of these tax benefits – losses are expected to amount to INR 29,000 crores. Maximum amount of losses to tune of INR 14,000 crores would be incurred in services tax section. Customs duties sector would face losses of INR 6,600 crores and for excise duties it would be INR 8,500 crores.
The ASEAN Economic Community, planned to come into effect in 2015, is expected to liberalise goods, capital and skilled labour flows in the ASEAN region. While there has been considerable progress in the area of trade integration, financial integration still lags behind. The ASEAN Banking Integration Framework, which aims to liberalise the banking market by 2020, could help pave the way for further integration and the entry of ASEAN banks into regional banking markets.
Greater banking integration in ASEAN will benefit the region.
Nouriel Roubini, a.k.a. “Doctor Doom”, is chairman of Roubini Global Economics and professor of economics at New York University’s Stern School of Business. Roubini has been consistently cited as one of the world’s top global thinkers. This year, he was voted as the most influential economist in the world by Forbes magazine.
Mario I. Blejer is a former governor of the Central Bank of Argentina and former Director of the Center for Central Banking Studies at the Bank of England. Eduardo Levy Yeyati is Professor of Economics at Universidad Torcuato Di Tella and Senior Fellow at The Brookings Institution.
James W. Harpel Professor of Capital Formation and Growth at the John F. Kennedy School of Government in Harvard University. Director of Program in International Finance and Macroeconomics at the National Bureau of Economic Research.