Straight from the Specialists
(Any opinions expressed here are those of the author and not of Reuters)
In what is widely perceived to be the UPA government’s final budget before polls due next year, Finance Minister P. Chidambaram is likely to continue with the economic reforms he introduced in recent months.
Chidambaram will have to balance the twin imperatives of encouraging domestic demand and stimulating growth while keeping the fiscal deficit and inflation under control. A prerequisite for domestic growth is encouraging investments into Indian industry and infrastructure, including healthcare and education. Improved infrastructure would improve productivity and lower the cost of doing business in India, thereby providing multiplier benefits for the economy.
Stimulating investment activity would also require increasing the availability and reducing the cost of long-term debt funding through regular banking channels, development of the corporate bond market, leveraging insurance and pension funds to invest in Indian corporates, dedicated infrastructure debt funds and supporting fiscal incentives. Development of the domestic private equity and venture capital industry would also benefit the economy.