'Strengthen governance, help private sector expand'

NEW DELHI: At a time when the government's image has been hit, OECD on Tuesday suggested that public sector governance should be made more transparent and accountable in India by separating operational and regulatory functions in the provision of services and by strengthening the anticorruption set up.

The policy prescription comes within weeks of the Planning Commission suggesting that the role of government departments should be limited to policy making, while service delivery should be handed over to professionally managed entities.

The OECD, a group of 34 industrialised nations, said administrative burden which have held back the expansion of private firms, needs to be eased and called for stepping up efforts to restructure public expenditure , relax constraints facing the financial sector and further promote international integration.

It says in the near-term the Indian authorities need to remain vigilant against the risk of high inflation and capital flows. The OECD in its economic survey of India said reducing fuel subsidies, which are amongst the largest among all fuel importing countries and cost 3.5% of gross domestic product, would result in significant environmental benefits.

"Gasoline prices are now allowed to move more closely in line with the world prices, a reform the government intends to broaden to diesel. Reductions in all forms of subsidies will require building a consensus that change is needed and providing clear evidence that the poor will not suffer as a result," the OECD survey said.

It said government should make efforts to intensify reforms in the financial sector. OECD said over the medium term, growth could rise to 10% if the rise in saving stemming from the fall in the number of children relative to the size of the working population is deployed into higher investment.
source-http://economictimes.indiatimes.com/news/economy/policy/strengthen-governance-help-private-sector-expand/articleshow/8859552.cms

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