Chinmaya IAS Academy – Current Affairs Chinmaya IAS Academy – Current Affairs
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Cautions against over-reliance on foreign currency debt
Chief Economic Adviser Krishnamurthy Subramanian on Friday sought to caution against a more-thannecessary reliance on foreign savings as a trigger for accelerating economic growth through more investments.
“If we have to invest for triggering a virtuous cycle, we need to tap into savings… domestic or foreign [and] there are trade-offs with any of those,” he said, adding that tapping into more of the former would mean leaving less with the households for consumption. Underscoring the need for hitting the ‘sweet spot’ in meeting the investment requirement, Mr. Subramanian, who spoke at The Global ISB Forum on ‘$5 Trillion in Five Years: Can we do It?’, said that exports were important in the context of driving demand. His observations follow the Union Budget speech in which Finance Minister Nirmala Sitharaman said it was high time India not only got integrated into the global value chain of production of goods and services, but also became part of the global financial system to mobilise global savings, mostly institutionalised in pension, insurance and sovereign wealth funds. She also said the government would start raising a part of its gross borrowing programme in foreign markets in external currencies. Mr. Subramanian strongly advocated labour law reforms for more growth, citing the case of Rajasthan. On the system of extending assistance to small units, he said it was necessary to support those units that grew large as opposed to those that remained “dwarves.”
