Delivering the third Prem Bhatia Memorial Lecture, Prof. Khusro held that the Government should not worry about the fiscal deficit but increase its expenditure on infrastructure projects in power, telecom, roads, railways and housing by 35 per cent. “The Government has to increase its spending on productive assets to revive the economy”
He said, there should be an incentive for the private sector to spend, Insurance sector should be opened up and public sector disinvestment should take place. India should cut down on-productive expenditure on three key areas – defence, subsidies and interest payments. When the security situation improves, then the Government should freeze defence expenditure, subsidies should be reduced and sharply targeted. India was getting increasingly involved with global economy, it would get hurt with increasing intensity too. “Recessions are occurring with increasing frequency since 1961 and are staying longer”. India would have to live with and try to deal with global economic downtrends in the future.