




Rajan identifies the “low-hanging fruit” as proposals on financial inclusion, improving markets and expanding credit infrastructure. “These are not controversial, do not conflict with any political party’s views and require little legislative effort,” says the report.
Seeking speedy implementation of these, Rajan singles out the need to roll out a unique national ID number to offer access to a linked no-frills savings account for every household. This will help the government transfer all payments to the poor such as wages under the employment guarantee scheme directly into their accounts. To prevent exploitation and settle grievances, setting up of an Office of Financial Ombudsman also ranks high in priority.
The government can then move on to the next set of “technically-simple-but-difficult-to-implement” reforms, given the lack of consensus among technocrats and regulators. These relate to monetary policy, capital controls, bank branching, allowing more banks and improving land tilling and registration. “Administrative, rather than political, leadership is required here,” says Rajan. Technocrats have strongly different views on these with the RBI hitherto keeping a tight leash on most of these areas. Finally, there are the “technically-difficult-and-politically-controversial” set of reforms. Rajan concedes that given their legislative nature, these are the toughest to implement.
Expectedly, issues such as reducing government control in the financial sector and regulatory reform fall in the last lap. Hence, the committee has suggested building more acceptance of these reforms through a mix of debate and experimentation.
Cleaning up, step by step
Low-hanging fruit
Unique national ID and no-frills savings account for all households
Financial ombudsman
Scrapping STT, allowing FIIs in currency & interest rate derivatives
Technically simple but difficult to implement
Monetary policy that focuses only on Inflation
... contd.


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