Reform, more reform; World Bank chants same mantra

The government should reduce primary deficit at the Centre and in States by carrying out tax reforms, reducing power sector losses and phasing out petroleum subsidies, said former World Bank vice-president Mark Baird here on Wednesday.

Releasing the World Bank’s economic report, “India: Sustaining reforms, reducing poverty,” at the Assocham-NCAER forum, Dr Baird said that India should reduce financial sector risks by implementing the new securitisation law, linking returns on provident funds and small savings to market benchmarks and establishing a clear framework for managing state government guarantees. Dr Baird is the principal author of the report.

The World Bank report emphasised on the elimination of exemptions, bringing of services into the service net and implementation of a uniform state value-added tax as some of the important fiscal measures.

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The report has also suggested greater fiscal discipline on state borrowing and transfers. It has recommended the removal of “artificial distinction between plan and non-plan expenditures.” Another recommendation pertains to the consolidation of Centrally-sponsored schemes.

It is not right to presume that India can get out of the present fiscal situation without taking appropriate measures, Dr Baird said.