Bold policies must for growth: Veerappa Moily panel

NEW DELHI: Citing the downward trend in petroleum prices, a parliamentary committee headed by Veerappa Moily has said that the situation is ripe for bold policy initiatives and the government should not let this opportunity go “abegging”.
Crude has hit a five-year low and is expected to remain subdued for the first half of 2015. In its report, the committee has observed that the Indian economy is at, “cross roads with high fiscal deficit and current account deficit (CAD) along with recurring high inflation.”

While growth slowed to 5.3% in the September quarter from 5.7% in the June quarter, the current account deficit (CAD) has widened to $10.1 billion or 2.1% of GDP in the July-September period, up from 1.2% a year ago, mostly on account of rising gold imports.

The committee further noted that the government and the Reserve Bank of India (RBI) should make concentrated efforts to increase domestic savings and investments through calibrated adjustment in policies.

Earlier, this month, RBI kept key interest rates unchanged.

“A trend towards higher savings in turn would also have some positive impact on the ballooning fiscal deficit,” the committee said in its report. India’s fiscal deficit had hit 89.6% of the full-year target by the end of October. The government has committed to keep this at the targeted 4.1% of GDP in the year ending March.

According to the finance ministry, the economy is expected to grow at around 5.5% in the fiscal year. The committee said that in order to boost savings and restore the investment rate to the high of 2007-08, policy interventions are required.