The maiden railway budget of the Modi government is the first step towards privatising the Indian Railways. Public-private partnerships and FDI will ultimately lead to train journeys becoming more expensive. The budget is not at all an inclusive one. The home-states of the prime minister and the railway minister (Gujarat and Karnataka, respectively) walked away with the bigger chunk of the new trains and routes. The states where BJP’s presence is weak were completely neglected. Kerala, Odisha and West Bengal came under this category. This kind of partisanship does not augur well for the nation. But giving due importance to the safety concerns of women passengers is a welcome move.
Kiran Jose
Kottayam
Savings must fund investment
Apropos of Renu Kohli’s column “Where are the savings?” (FE, July 7), overall savings in the economy peaked at 36.82% of GDP in 2007-08, falling to 32.3% in 2010-11. Gross domestic savings in 2013-14 have since fallen 7.1% from their peak of 2007-08. Having large holdings in savings can provide more capital than itself as it can be used as collateral or security for loans, providing more funds for investment and potential business ventures and hence, growth. Studies show that higher growth generally tends to precede high savings. Our enviably high savings rates have traditionally been financing the economic push of the past two decades. What gives stability and strength to India?s position is that around 70% of the country?s savings comes from the household sector, that have since sadly dropped to below-10% of the gross domestic product, for the first time in 13 years. Inflation eating into disposable incomes could be one factor and precisely why we ought to promote more savings to spur growth. That said, savings must be channeled to investment, not to underwrite expenditure. Attractive incentives to get savings to be invested must be offered. Infrastructure savings schemes for domestic investors that could be held in escrow for a targeted set of projects. This closed system of funding while boosting savings per se can help endemic monitoring of specific projects for delays/cost overrun. This has to be the way forward if the power of savings is to be harnessed.
R Narayanan
Ghaziabad
