Editorial - What lies in the road ahead?

4 January 2014 02:02 am Views - 1964

On Thursday, the Central Bank presented the Road Map 2014—the economic policy document which lays out valuable information about the road ahead for the country’s economy. Unlike the previous ones, it appears that the Central Bank’s Road Map 2014 was really taking the country somewhere since it was very clearly in cohesion with the 2014 Budget which was presented a few months ago.

Earlier in numerous instances it was evident that the country’s Finance Ministry and the Central Bank were in two different camps though  striving for the same goal—fast-tracked economic growth.  When one institution defended the rupee despite the dwindling of foreign reserves, the other institution went and devalued the rupee. Some speculated personality clashes between the heads running the two institutions as a key reason for the lack of unity.

"Though no reasons were mentioned behind the decision to award so many finance licenses in the last few years, the Central Bank identified the need to reduce the size of the Non-Bank Financial Institution (NBFI) sector from 58 companies to 20"

However, now it appears that both the institutions have turned over a new leaf and settled their differences. As a result, the Central Bank Road Map 2014 echoed the policy direction set by the Budget 2014 for a US $ 100 billion economy.

The Budget 2014 showed urgency in rectifying most of the wrong policy measures taken in the past. In the same way, Road Map 2014 carried policy directives to correct the past errors. For example, though no reasons were mentioned behind the decision to award so many finance licences in the last few years, the Central Bank identified the need to reduce the size of the Non-Bank Financial Institution (NBFI) sector from 58 companies to 20. The need for this was officially recognised in the Budget 2014 for the first time. At the same time the growth-biased monetary policy of the Central Bank also supports the Finance Ministry’s fast-tracked development goals.

However, one key area of concern for these two institutions is the credibility of the statistics they are dealing with. Scandalous allegations have been made against the government’s statistics office of ‘massaging’ key statistical data at the orders of higher powers. It is the duty and the responsibility of the Central Bank and the Finance Ministry to take steps to preserve the credibility of the Census and Statistics Department by allowing it to operate as an independent body in order to safeguard their own credibility.