Speculative short-term inflows on govt radar
While containing inflation remains a priority, the govt does not want high interest rates to stem growth. Steps to boost growth and encourage investment in crucial sectors would find a place in Budget.
By TNN |
NEW DELHI: High capital inflows, inflation and high interest rates are the key areas of concern for the UPA government as it prepares to present its last Budget.
���Measures to address the issues remain a priority. Ways to reduce risks the economy is confronting at this juncture will have to be tackled and initiatives in this direction are expected to be outlined by the finance minister,��� a government source said.
Capital inflows continue to pose a risk. Although inflows are expected to moderate on account of the slowdown in developed economies like the US, the government is unlikely to take a chance this year given that many states are going to polls. Sources said policy makers at the highest political level have laid emphasis on taking measures to correct any anomaly that threatens to dissipate the optimistic sentiment in the economy.
���Measures to address the issues remain a priority. Ways to reduce risks the economy is confronting at this juncture will have to be tackled and initiatives in this direction are expected to be outlined by the finance minister,��� a government source said.
Capital inflows continue to pose a risk. Although inflows are expected to moderate on account of the slowdown in developed economies like the US, the government is unlikely to take a chance this year given that many states are going to polls. Sources said policy makers at the highest political level have laid emphasis on taking measures to correct any anomaly that threatens to dissipate the optimistic sentiment in the economy.
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Measures to contain the inflows and to encourage outflows are both are on the radar of the finance minister, an official said. Last year saw several measures like a ban on participatory notes and a clampdown on external commercial borrowings to contain flows.
Measures to contain inflation are also high on the government agenda. The concerns over inflationary trends are being fuelled by record prices of food grain and oil globally.
���Worry on inflation has cast its shadow on the Budget as well. With the base effect tapering off, inflation is lurking around the corner. The concern this time is higher as the global supply situation of commodities remains worrisome and is bound to have impact on prices in India,��� the source said. The high-level committee on capital markets had suggested imposition of a tax on foreign inflows.
While containing inflation remains a priority, the government also does not want high interest rates to stem growth. Steps to boost growth and encourage investment in crucial sectors would find a place in the Budget to be presented on Friday.
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