Beyond the Forex Proposal

Burdened with rising interest payments, the government finds itself increasingly short of funds for investment and development purposes. In the circumstances the Planning Commission's foreign exchange for infrastructure scheme which is an implicit advocacy of a monetised deficit is indeed welcome. But to strengthen its own case, the commission should possibly be more explicit and advocate both the repeal of the FRBM Act and the restoration of the practice of monetising a part of the deficit. In the short run, while efforts to raise the tax-GDP ratio are underway, these are the only ways of garnering resources for faster and more egalitarian development.