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Emphasis on fiscal consolidation and strengthening reforms: EAC-PM

Updated: Jan 25, 2019 11:09:50am
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Emphasis on fiscal consolidation and strengthening reforms: EAC-PM

New Delhi, Jan 25 (KNN) A week before the interim Budget 2019, Bibek Debroy-led Economic Advisory Council to the Prime Minister (EAC-PM) said that reforms are required in sectors like agricultural, MSME, skill development, credit issues, digital payments and the banking sector.

“Amongst the challenges that need to be addressed are reforms in the agricultural sector, the MSME sector, skill development, credit issues, digital payments and the banking sector reforms”, said EAC-PM in a statement issued after its meeting on Friday.

It said that there should be no deviation from the fiscal consolidation target, but there must be continued emphasis on social sector intervention.

The EAC-PM had a meeting on January 25, 2019 and took stock of the state of the economy.

The Council endorsed that the macro-economic fundamentals of the economy are sound, but challenged remain, several of which are structural in nature.

It said “While the prospects for world economic growth does not look very promising, particularly in the advanced economics, there is sufficient amount of growth momentum in emerging market economies.

Accepting that India is not insulted from global developments, the council expected that the India’s growth to be in the 7-7.5% range in the next few years; one of the fastest in the world.

However, with reforms designed to address the structural problems, growth rates can easily be enhanced by at least 1%, it added.

Amongst the issues discussed by the EAC-PM were agricultural problem, investment trends (including investments by States consequent to 14th Finance Commission devolution), fiscal consolidation, interest rate management and credit and financial market issues.

The Council felt that the exchange rate management of the rupee by the RBI has been sound despite the volatility in the price of crude oil.

According to the council “There are indications that financial savings have started going up and there is credit up tick through private banks to the services sector. The reforms in the financial sector should be strengthened further building upon what the Government is already doing.”

The council felt that the challenge of insularity being seen in external trade should be reversed through supportive policy interventions because there is a positive turn in exports that are now visible.

The challenges in the agricultural sector should be addressed by looking closely at credit flows and support to employment programmes like MNREGA, EAC-PM suggested.

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