Need for Sound Public Finances to Fund High-Tech Economy

Everything is connected.  To have a high-tech sector, the country needs a strong manufacturing sector, a sound economy and sound finances.  Instead, it seems “India’s fiscal deficit in the first ten months of the 2013/14 financial year (at 5.33 trillion rupees) crossed the target for the whole year”,  and “India’s economy grew a slower-than-expected 4.7 percent in the three months through December, dragged down by a contraction in manufacturing and mining”. As the links show, I didn’t make this up.

So, where are we headed?  A huge fiscal deficit means that India has few funds to upgrade the educational and R&D infrastructure that our country urgently needs to strengthen and expand the high-tech sector.

Setting up another Pay Commission, especially when the economy is showing signs of a slowdown, could only fuel inflation and deepen the deficit. This is the time instead to invest in education, manufacturing and R & D. Or we continue to lose international competitiveness, which stokes the current account deficit, which stokes the fall in the value of the currency, which stokes inflation and further loss of competitiveness.

Eco 101.