The Indian Prime Minister's Independence Day speech last week, touched upon more reforms that are in the pipeline. Apart from social sector initiatives, the government is expected to pursue financial inclusion and replace the Plan-ning Commission with a more effective institution.
Commenting on the DBS Bank, India, said, ''Financial inclusion, which has also been backed by the Reserve Bank of India (RBI), is targeted at improving access to the basic financial transaction services across the economy. Notably, benefits are likely to accrue with a significant lag given the enormity of the initiative. Nonetheless, if implemented well, the move is likely to boost deposit growth and streamline subsidy payments through di-rect-benefit transfers.''
''As it stands, subsidy allocation was increased marginally at the July's budget. While petroleum subsidies are set to be lowered by 26%, the food subsidy al-locations were raised by a quarter to accommodate the National Food Secu-rity scheme. Expectations are that channeling the subsidy benefits through the banking system could help plug leakages, improve transparency and result in savings of circa 0.4-0.5% of GDP according to a task force. Alongside this initiative, there is also a need to reduce subsidies over the medium-term to address the stickier parts of fiscal spending, which has averaged more than 2% of GDP in recent years,'' it added.
DBS Bank, further said, ''Next, the planning commission, which formally guided fund allocation to states, is expected to be replaced by a leaner think-tank. This might replace the routine five-year plans with a more strategic and comprehensive plan of action on re-forms and developmental plans. Separately, the expenditure management com-mission (announced at the budget) also witnessed some progress as former RBI Governor Bimal Jalan was appointed to head the agency. This agency which has been entrusted to weed through the government's expenditure components will table its draft report by February
2015 budget and final version thereafter.''
''Beyond the announcements, focus will be on implementation with clear time-lines. For now, the financial markets continue to extend gains on the back of anticipated domestic recovery and supportive risk sentiments on loose global policies,'' it opined.
Disclaimer: IRIS has taken due care and caution in compilation of data for its web site. Information has been obtained by IRIS from sources which it considers reliable. However, IRIS does not guarantee the accuracy, adequacy or completeness of any information and is not responsible for any errors or omissions or for the results obtained from the use of such information. IRIS especially states that it has no financial liability whatsoever to any user on account of the use of information provided on its website.
