CEA KV Subramanian says this sector needs substantial, structural reforms to make economy bigger

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Updated: February 28, 2020 12:24:41 PM

CEA Subramanian said FSLRC report, Narasimham Committee, and Raghuram Rajan Committee reports need to be thought and revisited.

indian banking and financial sector, banking industry, slew of measures, fiscal measuresCEA Subramanian said that the government has announced many fiscal measures in the last eight months and Budget 2020 also announced a lot of stimuli. (Bloomberg image)

To make banking and the financial sector proportional to the size of the economy so that it can contribute to the economy to make it even bigger, the Indian financial sector needs substantial structural reforms, said Chief Economic Adviser Krishnamurthy V Subramanian. Speaking to The Indian Express, he said the FSLRC (Financial Sector Legislative Reforms Commission) report, Narasimham Committee, and Raghuram Rajan Committee reports need to be thought and revisited. On the ongoing slowdown, KV Subramanian added that the government has announced many fiscal measures in the last eight months and Budget 2020 also announced a lot of stimuli such as equity infusion in the National Investment and Infrastructure Fund and the India Infrastructure Finance Company Limited, tax breaks for individuals and the 16-point agenda for rural areas.

He said that in the latest Budget, the government has increased capital spending and provided the fiscal stimulus without worrying too much about fiscal prudence. He added that the Budget has given a 50 basis point increase within the FRBM Act, a 50 basis points through the direct taxes, a 1 per cent through the basically the equity capital infusion in NIIF and IIFCL, that adds up to 2 per cent.

Also Read: Raghuram Rajan’s warning: Falling economy or Coronavirus risk, which one to deal with first?

On the privatisation of the profit-making PSUs such as Bharat Petroleum Corporation Ltd, K V Subramanian said that it is a good move that shows a change in policy stance and will help the economy. “I think when privatisation is being done to cede space to the private sector, and thereby enhance efficiency in the economy, it is a sign that some important economic principles that people like us adhere to are actually being heard and being implemented as well,” he further added.

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