A strong supply-side prescription for economic health
When conventional thinkers across the globe were focusing on quick-fix solutions based on demand management, it was Rajan who emphasized on the supply-side issues and suggested a progressive policy to create long-term sustainable growth for the stressed nations.
The latest Economic survey, too, offers a strong supply-side package for India’s economic revival, as the nation’s investment is significantly hit due to several supply bottlenecks. Hence, the survey says, “The way out lies in shifting national spending from consumption to investment; removing the bottlenecks to investment, growth and job creation in part through structural reforms, combating inflation both through monetary and supply side measures”. The survey recommends creation of the key drivers and enablers of growth – be it infrastructure, transportation sector, housing or sustainable agriculture.
In fact, the survey includes a special chapter focusing on job creation. The future holds promise for India only if we seize the 'demographic dividend', as nearly half the additions to the Indian labour force over 2011-2030 will be in the age group of 30-49. As per the survey, an increasing number of high-productivity formal jobs have to emerge from the manufacturing and service sectors.
The survey has come down heavily on India’s current macro-economic management.
While the key fiscal risk lies in the burgeoning subsidy burden, the tight monetary policy in the
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