India needs to take concerted action to deal with the ongoing financial crisis rather than piecemeal efforts that could only deepen current recessionary trends, Rajya Sabha member NK Singh has suggested.
“One need not act in panic but one must not panic to act,” Singh said during his intervention in the debate in the Rajya Sabha on the first supplementary of the Finance Bill.
The JD(U) member — Singh has been closely associated with economy policy formulation at the Centre over the last decade — said it was important for Finance Minister P Chidambaram to pay attention to institutional reform, process engineering and enforcing transparency standards.
“The country would like to see a legacy of Chidambaram-I accentuated by a multiplier,” he said, asking the FM to introspect on the two Chidambarams: the first in the mid-90s who looked to the future and brought about tax reforms while Chidambaram-II was bogged down by circumstances, unable to convert his vision into a reality.
Singh said this was the first time the government was seeking Rs 1,37,000 crore as the first supplementary, this would push fiscal deficit beyond acceptable limits. Questioning claims that the fundamentals of the economy were strong, he said a combination of high fiscal deficit, high inflation and high current account deficit did not augur well.
He said the government has boxed itself in a corner with already high fiscal deficit and inflation, which may not be reined in before early next year.
Calling for greater liquidity due to huge cross-border flows, Singh advocated cutting Cash Reserve Ratio, Statutory Liquidity Ratio and reverse repo rates by at least 100 basis points each.
He also stressed on greater public investment that would not only require resources, but also better implementational capability on public outlays like Bharat Nirman.