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Govt endeavour to push reforms lacking even after Fed decision

New Delhi, DHNS: Sep 20, 2013

After the US Federal Reserve’s decision to continue with $85 billion per month stimulus injected an unexpected momentum in India’s stock, bond and money markets, experts have suggested the  government use the limited window of opportunity to push reforms, but the Centre’s commitment to reforms sounds far from convincing.

Talking to reporters soon after Federal Reserve’s measures, Economic Affairs Secretary Arvind Mayaram said, the government will continue to deepen reforms. But another official told Deccan Herald that the government will not halt its subsidy payout despite capping non-plan expenses by 10 per cent. "Subsidies will be based on whatever is the requirement. Obviously, our endeavour is to reduce the subsidies as much as possible, but we cannot say there will be a 10 per cent cut,"  the official said.

"If there is a further requirement for subsidy payout, we cannot say no. At the moment subsidies are not so disturbing. Fertiliser is in control, food is in control, petroleum, there might be a slight overshooting but we will get a better sense after a month or so," he said.
The Centre, which has hastened reforms in infrastructure and coal sectors in the past six months, needs to do more on subsidy front, especially fuel and fertilizer subsidies.


“If reforms, especially the ones targeting subsidies, are not addressed at a time when rupee is getting strengthened on Fed’s action and crude slipping after concerns over Syria eased, it will again be a panic situation for India, especially after the talks of taper come alive somewhere in November,” said Aman Agarwal of Indian Institute of Finance. The government, however, seems to have postponed its decision on oil price reforms and talks about carrying out a one-time increase in diesel prices is relegated to the backburner once again after the rupee stabilized.

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