Arictle;
http://economictimes.indiatimes.com/opinion/columnists/swaminathan-s-a-aiyar/real-and-imaginary-problems-of-electronic-cash-transfers/articleshow/17448650.cms
Comment;
Although i know the writer for a long time because he writes
very well but i think he is missing the macro economic effects – inflation and
budget deficit – of such a welfare scheme. For the past 2-3 years we are in the
realm of high inflation and high fiscal deficit. A simple rule of economics is
that whenever money supply increases, either by government or by the central
bank, it stokes inflation, then why here nobody is taking note of that thing…
Moreover, we are continuously discussing government fiscal deficit as high and
the government too is planning to bring it to a sustainable level…
i’am in no way opposing CTS but the ground realities tell a
different story; a cash strapped government and a lonely central bank fighting
with inflation… It is like telling people about something we can not deliver,
right now, but the government looks in haste. Cash transfer schemes have been
successful in other countries (like Brazil) to make a dent on poverty which
India can replicate, but with a pause, till the supply side is good enough to
take the shock demand presents. i’am sure such a scheme would necessitate a
little inflation and we have to chose we want it right now or with a time-lag.
If we go for former we will have to chose an inflation target of 10% or more,
but, if we go for latter we have to wait for some time to let the inflation
cool-down and chose an inflation of 6-7%.
No political party can dare to oppose a scheme which covers
a large population but they should endorse their own versions/variants of CTS…
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