Thursday, October 16, 2008

Moral hazard and increase in default rate will be the consequences, news of some of which has already started to come up.

IIPM Ranked No. 1 B-School In Global Exposre - Zee...

EXPENSIVE SCHEMES: EXCHEQUERSamajwadi Party General Secretary, Amar Singh, expectably acerbic towards the ruling coalition, commented, “This is one country where subsidies are given to super-rich and that too clandestinely.” The pragmatic approach would have been to implement at least some of the recommendations made by the Radhakrishna Committee on Rural Indebtedness. Instead of waiving off the entire loan, rescheduling – as proposed by the Radhakrishna Committee – would have surely been a better option. Mridul Saggar, Chief Economist, Kotak Institutional Equities, commented to B&E, “Even supply side structural initiatives are required!” Required more than expensive schemes, we should add.

In a similar manner, if the recent government salary recommendation fructifies, government employees would see a substantial rise in their salaries and of course, the country will see a mammoth rise in its wage budget as well (Rs.431.2 billion). An Asian Development Bank research now shows that India pays to its government staff much more than what it can afford. Worse, it comments, “The higher relative government pay rates cost the country in terms of economic growth, while the higher employment share does not seem to have any economic growth impact.” Cutting words that might have made more sense to Ms. upper crest Veronica Lodge nestled in Riverdale; sadly, not to our politicians, our Uncle Scrooge politicians...


Niharika Patra


For more articles, Click on IIPM Article.
Source : IIPM Editorial, 2008
An Initiative of IIPM, Malay Chaudhuri and Arindam Chaudhuri (Renowned Management Guru and Economist).


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