Economy News Notes

“There is an inflexion point beyond which fiscal deficits militate against growth. Government borrowing is not bad per se, but excessive borrowing is. There is, therefore, a need to cap total public debt as a proportion of gross domestic product (GDP),” Dr. Subbarao said
Stressing on the need for improving the quality of public expenditure, Dr. Subbarao said,
- “If the government borrows and squanders that money away on unproductive current expenditure, both fiscal sustainability and growth would be jeopardised.”
- “Governments need to spend on merit goods and public goods, in particular on improving human and social capital and on physical infrastructure”
Responding to criticism that the RBI's decision to increase interest rates 13 times since March, 2010, has impacted growth, the RBI Governor said the policy action was “geared toward safeguarding medium-term growth even if it meant some sacrifice in near-term growth.”
An inflation rate above the threshold level of 4-6 per cent impacts growth adversely, he said
At this high level, inflation is unambiguously inimical to growth; it saps investor confidence and erodes medium-term growth prospects.

Union Communications and IT Minister Kapil Sibal has now turned his focus on expanding the scope of India Post to take on the growing challenge from private courier business and diversify into banking.
“We have started the process of formulating the National Postal Policy with a two-pronged approach — to develop services that assist, facilitate, enhance and quicken the process of development aimed at inclusive growth, and reposition India Post to make it a self-sufficient, efficient and cost-effective provider of these services,” Mr. Sibal
“This will give courier service-providers legal recognition…we are suggesting registration, not licensing. We have no intention of licensing the courier industry and will only register them to know the size and status of the industry,” he said.