Macroeconomic fundamentals have improved in India and this can be seen even in cross country comparisons. Inflation is low, CAD is drastically reduced and foreign investment has increased. India’s Revenue to GDP ratio is 19.5% as per IMF and needs to move to 25% which is ideal for Asian economies.

Policy reforms of the government are deregulation of diesel prices which led to new investments in this sector, raising gas prices to $5.6 per million BTU which provided incentive for greater gas supply.

Direct benefit transfer for cooking gas consumers, auction of coal mines, auctioning of mines for minerals, G.S.T bills, taxing coal and diesel, increased F.D.I limits and Aadhar backed subsidy transfer led to reforms.

Labor bureau statistics show that the rural wage growth has been declining since 2011. RBI conducted surveys on household inflation expectations has also been consistent with it.

Agriculture sector needs to focused on by targeted subsidies and phasing out distortion causing subsidies. The 41% of total area under agriculture is un-irrigated. I.C.A.R which is the apex organization for agriculture based research, education and extension needs to be revamped and probably these three roles need to be separated. 

The strengthening of the forward market commission is being done by merging it with S.E.B.I and this will help farmers discover prices of commodities in advance and help them reach hedge price risks.

India should ensure that the fiscal deficit should be restricted to 3% of GDP. This should be backed by Zero Revenue deficit and ensure that borrowing should be only for capital formation.

Subsidies also intended for the poor are cornered by the relatively wealthy due to not being targeted effectively. The water subsidies are taken by the relatively rich private taps then the public taps. The subsidy on fertilizers also benefit the firms than the farmers. The subsidy on electricity benefit the wealthier households. Subsidy on freight rates are insufficient as they are the highest in the world due to cross subsidization of passenger fares.


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Q1:Revenue to GDP ratio of India should move towards

  • 20
  • 50
  • 25
  • 30

Q2:Apex organization for agriculture based research, education and extension

  • 2ICAR
  • 2Agriculture ministry
  • 2Agriculture universities

Q3:Which organization was merged with SEBI

  • FSDC
  • Forwards market commission
  • IDFC
  • CAR

Q4:India should ensure that the fiscal deficit should be restricted to ___% of GDP.

  • 1
  • 2
  • 3
  • 4

Q5: Revenue deficit should be ideally _% of GDP

  • 1
  • 2
  • 3
  • 0