ISSN (Print) - 0012-9976 | ISSN (Online) - 2349-8846

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On Raising Domestic Saving Rate IN EPW of May 6-13, the editorial on saving ('Shortage of Saving', pp 967-68) and the article by V M Dandekar ('From External Recovery to Internal Bankruptcy', pp 987-88) raise very important and related issues pertaining to the decline in the overall and public sector saving rates. The key question is how to prevent further decline in the overall rate and how to raise the rate as soon as possible. Raising the saving rate calls for a three-pronged strategy of raising household, corporate and government saving rates. In the case of the first, only two broad policy options are there: making saving more attractive than consumption (very difficult in an era of globalisation, computerisation and maruti-isation) and increasing the contribution rates and coverage of compulsory provident funds (as in some of the east Asian economies) along with exemption of the contributions from income taxation coupled with severe restraints on withdrawals prior to old age. in regard to raising corporate savings, policies have to he such as to encourage the ploughing back of profits. As for generating and eventually raising government revenue surpluses, as V M Dandekar and many others have noted time and again, several initiatives are required. They include reducing the internal and external public data via the use of the privatisation proceeds and instituting expenditure reforms to achieve a predetermined percentage reduction in recurrent expenditures other than debt service payments.

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