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April 21, 2024

Former RBI Chief Calls for Government White Paper on Freebies: Here’s Why It Matters

Former Reserve Bank of India (RBI) Governor, D Subbarao, has urged the central government, led by Prime Minister, to release a ‘White Paper’ addressing the issue of freebies or giveaways. He emphasized the need for a comprehensive debate and consensus among political parties on this matter.

In a recent interaction with PTI, Subbarao stressed the importance of educating the public about the costs and benefits of these freebies. He believes that it is the government’s responsibility to enlighten the population on this issue. “This is ultimately a political issue, and there has to be political consensus on this,” he stated, urging the central government to take the lead.

Subbarao advocated for the release of a White Paper to facilitate discussions and generate consensus among political parties. “Educate people on the pros and cons of these giveaways, and ensure how we can put a restraint on that and how we can enforce it,” he emphasized.

Highlighting the fiscal constraints faced by a country like India, Subbarao emphasized the need for the government to provide safety nets to the most vulnerable sections of society. However, he also urged for introspection on the extent to which these benefits can be extended given the financial limitations.

“In a poor country like India, it is incumbent on the government to provide some safety nets to the most vulnerable sections and also introspect as to how far they can be stretched, given the fiscal constraints,” Subbarao remarked.

He called for a more informed and vigorous debate on freebies and suggested imposing restraints on political parties. “You should ask if it is the best use of this money or we can do something better,” he added.

Regarding fiscal discipline, Subbarao stressed that both states and the central government should adhere to Fiscal Responsibility and Budget Management (FRBM) targets, especially when some states are crossing these limits.

Speaking about India’s growth prospects, Subbarao referred to a study by the International Monetary Fund (IMF), which indicates that India needs to consistently grow at a rate of 7.6% till 2047 to achieve developed nation status. He acknowledged the challenges posed by factors such as climate change, geopolitics, and globalization, making the goal difficult but not impossible.

“A developed nation will have four pillars – rule of law, strong state, democratic accountability, and institutions,” Subbarao emphasized, highlighting the areas India needs to nurture and develop to achieve its development goals.

Despite Prime Minister Narendra Modi’s vision of India becoming the third-largest economy by 2029, Subbarao cautioned against premature celebration. He suggested that even achieving this milestone might not erase India’s status as a poor country, urging for sustained efforts towards holistic development.

 

Jhumpa Lahiri

Jhumpa Lahiri

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