The first change is to lower the fraction of mortgage interest that households can deduct from their taxable incomes. The second is to lower the fraction of their interest payments that corporations8 are allowed to deduct from their taxable incomes. Of course, it would be appropriate and important to adjust the timing of these changes in light of prevailing macroeconomic conditions.
In the external sector, India has come out with a clean track record, having met all payment obligations in time, even by pledging gold, a cherished national reserve of sentimental value, when it became necessary in 1991 due to liquidity crisis. Yet, both sectors have not only become reasonably efficient and resilient but are also in alignment with global best practices.