Letters to BS on Budget 2018, negotiating rougher monetary, fiscal edges

Pacing behind two major reforms, Budget 2018 would negotiate rougher monetary and fiscal edges. The fiscal deficit has spilled over with predictable revenue dips, to be now faced with a rising crude bill. The thrust on increased agro sector spends is unavoidable. Substantial outlays for the education and health sectors are called for on pressing demands; on skill levels imposed by modern technology and that of keeping our prized demographic dividend healthy to maintain efficiency.

With interest rates rising in leading economies we may have little choice but to follow suit. In any case incremental corporate investments have been inelastic to rates for many quarters. Rising key rates will reduce existing corporate bond values and increase cost of their borrowings. Fiscal incontinence would skew it further.

The burden of investment for growth must revert to the government and a fiscal overreach is inevitable. A measured fiscal breach may not be hard to sustain as the Economic Survey finds the economy robust overall. Is not Trump daring to ride the fiscal dragon to capture growth?
 

Ravi Narayanan, Navi Mumbai Letters can be mailed, faxed or e-mailed to: 

The Editor, Business Standard

Nehru House, 4 Bahadur Shah Zafar Marg 

New Delhi 110 002 

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