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Saturday, May 17, 2014

Five things the government needs to do to revive growth

In the last two years of UPA-II, growth has plummeted to a decade low. While the biggest task before the new government is to revive growth, high fiscal deficit will not allow it to be too extravagant and interest rates cannot be cut as long as inflation remains high. ET charts out the agenda for new government.

Spell out a clear strategy to rein in inflation 
Why is this important

High inflation has forced RBI to keep interest rates high HIGH interest rates have discouraged consumers from buying goods or new homes IT IS one of the reason for corporates not investing because of high inflation households have invested in gold.

Things that can be done immediately: 

Release food grains in open market to check inflation; BE ready to counter a deficient monsoon. 

Ascertain stocks of key items & be ready with an import strategy. 

Longer term strategy dismantle the APMC Act to allow farmers to reach consumers directly; FACILITATE corporate involvement in sourcing and distribution of fruits & vegetables. 

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