Janmejaya Sinha: How to Kickstart Second Leg of Reforms

Janmejaya Sinha/ Forbes India

India Budget 2012: India should address structural issues and kickstart the second leg of reforms, says Janmejaya Sinha

The equation is fairly simple. We need to increase revenues and manage our expenditures. The deteriorating financial situation is a result of slowing growth and its consequence on tax collections. On the other hand, expenditures have been marked by laxity, populism and inefficiency. We have many poor subsidies - oil, fertiliser, growing populism, great inefficiency and leakage. This is further exacerbated due to high interest rates and the consequential crowding out and negative impact on growth.

The first thing India needs to do is to bring efficiency in the overall system to spur the economy. It should address structural issues and kick-start the second leg of reforms that are stuck in the spokes of the short-term election cycles. India needs as much money to build physical infrastructure like roads, ports and modernise railways as it needs in soft infrastructure like health and education. These are very large, substantive and tricky requirements that have to be met. It is a matter of skill and judgement as to how to spend our money, but it