'Fiscal management the growth driver'

BANGALORE: The reform process in the 90's has helped India achieve a high growth rate. But the country needs to get its act together in fiscal management, if it wants to accelerate its growth rate further, said World Bank's chief economist and senior vice-president, Nicholas Stern. Delivering the keynote address at the World Bank's Annual Bank Conference on Development Economics here on Thursday, Stern said India had managed to live with high fiscal deficit and public debt by relying on its domestic financial (banking) system. Need for fiscal accountability: But he warned that it might not last long. How much longer can this continue without increasing economic vulnerability to shocks and undermining performance? he asked. India has already begun to feel the impact of fiscal indiscipline as development spending on health and education has stagnated while in the case of infrastructure, public expenditure has actually fallen, he noted. 'Developed countries should deliver on promises': Stern also said it was time for the rich and developed countries to deliver on their promise of opening up their markets wider to exports from developing countries. Funds shortage: Rakesh Mohan, Reserve Bank deputy governor, too called for an increase in public expenditure on infrastructure. While infrastructure investment in the case of roads, telecom and ports has been good, the performance is seen to have been disastrous in other key sectors such as railways, power and urban infrastructure. E-governance has potential, but also challenges: E-government can significantly improve delivery of services, but it requires strong political and administrative leadership and detailed project management, Subhash Bhatnagar, professor in the GM Indian Institute of Management (IIM), Ahmedabad, said at the World Bank conference on development economics. E-governance is only 20 per cent technology, 35 per cent business process re-engineering (changing the processes you worked with), 40 per cent change management and 5 per cent luck. Bhatnagar noted that across the there were several instances of efficiency gains arising from e-government projects and particularly commended Karnataka's Bhoomi and Andhra Pradesh's CARD projects. However, implementation is difficult and there are risks that need to be understood. The challenge is to promote widespread use in areas where benefits outweigh risks, he said. On the issue of making services like education and health work for poor people, World Bank's Ritva Reinikka said these should not be left to the private sector, nor should public spending be increased mindlessly. We need to expand information, tailor service delivery arrangements to service characteristics and country circumstances, and strengthen the public sector foundations of service reform, she said.

'Fiscal management the growth driver'

The reform process in the 90's has helped India achieve a high growth rate. But the country needs to get its act together in fiscal management, if it wants to accelerate its growth rate further, said World Bank's chief economist and senior vice-pr...

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