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 euro slipped through the low of the year and the weekly trend line going back to 2012. However, it found bids near $1.3460 and has recovered a bit. The key on the upside now is $1.3500. A move above there and the technical tone can begin stabilizing.
The lower than expected core US CPI reading has helped. The yen has also ticked higher as Treasury yields ease.
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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.