Mr. Mukherjee is losing sleep due to subsidies and deficits because many in his party and in the NAC are burning the midnight oil to dream up many ways to plunder the exchequer.
This is something that Indian politicians appear singularly incapable of or unwilling to understand. On a separate note, news such as this and this are the ones that should make a US-economy sceptic like me become more open-minded about a US revival. Of course, there is the political economy to keep in mind….
Martin Wolf’ piece in FT, based on his recent lecture in India, is a good one. He is right to remind India that the reforms that made sense to India before the global crisis make even more sense now than before. The right lessons to draw about the global financial crisis are that complacency is dangerous (but then, India is already guilty of it, as were and are many other nations) and that the financial sector deserves to be subject to regulation.
India’s decision to allow Indian carriers to import fuel from overseas directly exempts them from sales tax imposed on fuel sold in India. It is an immediate relief for them but I am not sure if this is a permanent solution. I am not even sure if this is a solution at all. If that is the case, why only airlines? Why not other bulk importers? What is the quid pro quo from the airline companies? What are the implications for the fiscal deficit?