The strategy for helping the country move into the next decade rests on a three-pronged approach with three legs namely a focus on inclusive growth, recognizing the pivotal role played by the private sector in wealth creation and promoting a virtuous cycle of growth led by the private sector. The recent reforms undertaken by the Government has growth as a pivot. This in turn would crowd in private investment, for which the Government is undertaking supply side reforms on the one hand and augmenting capex to increase demand. This was stated by Dr. K. Subramanian, Chief Economic Advisor, Ministry of Finance, Government of India.
Dr. Subramanian stated that there is an impelling need to improve the competitiveness of the manufacturing sector which in turn would help in job creation and promote inclusive growth. The government recognizes that the high cost of doing business – such as logistics, power, credit, etc - has impacted manufacturing competitiveness and has likewise taken remedial measures, by undertaking labour reforms, power sector reforms, MSME policy etc which would reduce operating costs and encourage industry to build scale.
The government’s remit is to act as a facilitator to withdraw from sectors where it is inefficient and in turn build capacities in the public goods such as in education and health, stated Dr. Subramanian.
The important aspect of the recently announced PLI scheme is that it incentivizes growth, it is more than a democratized subsidy and would help industry to build scale, said Dr. Subramanian.
Dr. Rakesh Mohan, Member (Part-Time) Economic Advisory Council to the Prime Minister of India and President and Distinguished Fellow, Centre for Social and Economic Progress, while articulating that the Indian economy needs a reboot, stated that there is a need for a third-generation reforms aimed at leapfrogging its growth trajectory to the next level of around 8-9% which would ensure a doubling of per capita income in coming decades. There is also a need for a regulatory standards-setting authority which is technologically competent to deliver on the third generation reforms.
Dr Arvind Virmani, Chairman, EGROW and former Chief Economic Adviser to Government of India, stated that the government has undertaken bold reforms which are market oriented and would help build the competitiveness of the Indian economy. He stated that the reform process had veered around three broad changes which could take the economy to a higher orbit of growth. These broad areas entailed, firstly a change in philosophy whereby there has been a market-oriented approach based on competition; second, a change in approach wherein the government had become a facilitator rather than a director of the economy and thirdly, there has been an institutional reform to complement policy which would encompass areas such as improving ease and cost of doing business, among others.
Dr. Virmani made a strong pitch for tax reforms such as initiating reforms in GST which should increase consumption and demand.
Dr Vijay L Kelkar, Chairman, India Development Foundation and former Finance Secretary to Government of India spoke on GST reform by improving the design of GST, improving the coverage by bringing all items into GST, and others.
Dr. Ashok Gulati, Infosys Chair Professor for Agriculture, ICRIER, laid emphasis on changing the mindset of reforms by looking at total factor productivity rather than exclusively on land or water productivity. He called for strengthening R&D in agriculture. Dr Gulati suggested that farmer’s land should be used to set up solar panels, or creating solar cooperatives, with surplus power being given to the grid.
Dr Janmejaya Sinha, Co-Chair, CII Global Economic Policy Summit and Chairman - India, The Boston Consulting Group India Private Limited said that there is need to create top institutions where we can take advantage of high technology areas such as AI, robotics, quantum computing etc. At the low-income end, we need to triple our expenditure on education and health. Contract enforcement should be a priority.
Mr Sanjiv Puri, Chairman CII Agriculture Council and Chairman & Managing Director, ITC Limited, said that calibrated reforms have been undertaken by the Government which auger well for the economy, going forward.
18 November 2021