next wave of financial sector reforms..!!

The first wave of reforms introduced in early 1990s helped us to achieve high GDP growth rates. Our economy became competitive and there was significant increase in our exports . The inflow of FDIs and FIIs has promoted the growth of our industries. The opening of the insurance and telecom sectors were major decisions in the last decade. The reduction of import and export duties resulted in increased trade and made our economy more competitive.

However, a lot of reforms are yet to be initiated . First of all, our banks are highly incompetitive and operate on old business model. Most of our banks in the public sector are highly inefficient and the presence of large number of small banks makes it difficult to achieve economies of scale . we require few banks which are large in size and can compete on the global scale and thus reforms in our banking sector are long overdue.

Secondly , we need to rationalise our indirect tax system. Different rates of taxation across our states keep us away from having a single economic market and make it difficult to optimize our logistics .It is hoped that GST will go a long way in establishing a common market . The direct taxes like income and corporate taxes should be moderated to give a boost to entrepreneurial activity. The labour reforms are equally important but a sensitive issue in a developing country like india. The capital account convertibility can be attempted in a gradual manner. The rationalization of huge subsidies granted on oil and fertilisers should be pursued without politicizing it . All this requires a strong political leadership and willingness to work for our long term interests rather than playing

votebank politics