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'Implementation of schemes is a concern'

DNPUN36724 | 3/3/2011 | Author : Arun Jayan | WC :533 | Business & Economy

Q&A: Pradeep Apte,consultant, the World Bank

A professor at Fergusson College and Gokhale Institute of Politics and Economics, Pradeep Apte is a consultant at the World Bank and World Trade Centre, India. He is also a member of an expert group on the 13th Finance Commission, government of India. He has written many research papers and has many publications in his name. Apte, who is reluctant to do a black-and-white analysis of the budget, shares his views with Arun Jayan on a few key announcements in the Union budget this year.
Your opinion on Budget 2011.
I will call it a transitional budget. It has to be seen how the proposals will be implemented. Undoubtedly, the budget should address itself to the long overdue reforms and aim at fiscal consolidation. Surprisingly enough, the debt to GDP ratio has fallen even more rapidly than the 13th Finance Commission's recommendations. However, the other two indices, revenue deficit to GDP ratio and gross fiscal deficit to GDP ratio are admitted to be not attainable even by 2013-14.
What about the implementation of the Goods and Services Tax (GST)?
Introduction of the GST will be a revolutionary change. However, there are various hurdles for the implementation of GST. One of the outcomes may be that at least four major articles have to be amended in the Constitution. Another main challenge before the government is to get consensus in parliament. If the finance ministry is able to pass the bill in parliament, it will be a giant leap forward.
And the subsidies in the budget?
Nutrition-based subsidies (NBS) have been announced in the budget. The budget says all NBS policies have been successfully implemented last year and will extend to urea now. However, it doesn't mention any concrete plan. It is the same with subsidised kerosene oil. There is no mention about the quantum of subsidy, its effect and how the government is going to implement it. Also, state governments should have the administrative preparedness to implement all this successfully.
Take for example, the National Rural Employment Guarantee Act (NREGA). When it comes to proper implementation, it varies from state to state. This has to be explained.
What can be done to achieve this?
A proper review of various schemes, proposals and subsidies announced in the budget should be carried out. Evaluation is now done on the face value or on an emotional basis, which has to change. The finance ministry should take steps to study whether all the allotted funds and proposed schemes are reaching the masses at the ground level.
The finance minister has also given an impetus to Foreign Direct Investment (FDI) and Foreign Institutional Investors (FII). What do you feel about that?
We were always inclined towards FIIs. FIIs and FDIs are inevitable. In the changed global scenario, if governments do not allow foreign players to enter the market, these players will try for a backdoor entry. The FDI directly increases employability and productivity, while FII does it indirectly. One of the fine examples is China. The entire growth of China is FDI driven but we took six years to decide whether to allow entry to Posco. Though we do not follow any prohibitory regulations, it's high time we add operational effectiveness to it.


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