In Mint, Niranjan Rajadhyaksha suggests policy reforms to provide an impetus to GDP, keeping macroeconomic stability in mind. Excerpts:
"The Indian economy will have to accelerate in the coming years if it has to move at East Asian rather than Indonesian speed. The experience of the past 10 years suggests that the growth rate that India can sustain within the constraints set by the other macroeconomic targets is 7% rather than 8%—or perhaps even lower. In other words, India finds it tough to grow at 8% while maintaining economic stability in terms of inflation, fiscal prudence and the current account deficit.
The tricky political economy decision for the government is whether to ease some of the economic stability constraints such as the fiscal deficit, the current account deficit and retail inflation in a bid to maintain economic growth at 8%; or continue to prioritize hard-won economic stability while facing the risk of social unrest as lower economic growth fails to provide the adequate number of jobs in formal enterprises; or put in place policy reforms that can help raise potential growth without creating periodic bouts of macroeconomic instability..."
Read the whole article here.