New Delhi: Finance Minister Nirmala Sitharaman should acknowledge the state of the Indian economy as a first step towards addressing issues plaguing it, former Planning Commission deputy chairperson Montek Singh Ahluwalia said at ThePrint’s Off The Cuff Monday.
In a conversation with ThePrint’s Editor-in-chief Shekhar Gupta and this reporter, Ahluwalia said India is not on track to either achieve a $5-trillion economy by 2024, or double farmer incomes by 2022 — two stated objectives of the Narendra Modi government.
“To reach a $5 trillion target, the average (GDP) growth rate counting this year has to be 9 per cent on an average over 6 years. We are going to get less than 5 per cent this year and probably more than 5 per cent next year. We are not on track,” Ahluwalia said.
He added that the touchstone of the government’s success should be if it is going to get back to an 8-per cent growth.
“We are not going to double farmer incomes. Agriculture is doing worse than it was during the previous years. And frankly there is no way you can double farmer incomes unless you take people out of the land and give them other jobs. And that is the other big non-performance — jobs,” he said.
“The first thing the finance minister should do is let the people know what the state of the economy is,” he added.
“We need to know why is there a loss of confidence. The government needs to engage with the private sector. (Industrialist) Rahul Bajaj talks about a fear factor. You need to engage in a credible way so that people are reassured.”
The remarks come at a time when Sitharaman has been criticised by several economists including Ashima Goyal, a member of the Prime Minister’s Economic Advisory Council, for not even mentioning the slowdown in the Indian economy in her Union Budget 2020-21 speech.
On Indian economy
In the wide-ranging interview, former Planning Commission chief Montek Singh Ahluwalia spoke about the concerns around the Indian economy, the government’s decision to not join the Regional Comprehensive Economic Partnership (RCEP), and the ministerial control on statistical data.
Talking about the slowdown in the economy, the economist pointed out that private investment has collapsed, leading to a big decline in demand.
Calling the export figures a “disaster”, Ahluwalia said increasing import duties was a big mistake and against what had been done since 1991. Gradually decreasing import duties had made Indian industry competitive, he said.
He also stressed the need for restoring the health of the banking system, and for improving the fiscal situation not by decreasing expenditures but by increasing revenue collections.
In his new book, Backstage: The Story behind India’s High Growth Years, Ahluwalia recounts his tenure in the government and the handling of the 1991 economic crisis among other subjects.
Not joining RCEP a ‘mistake’
Speaking at ThePrint OTC, Montek Singh Ahluwalia was critical of the Modi government’s decision to not join the RCEP.
The China-led RCEP is a free trade agreement between ASEAN nations and its FTA partners that promises to ensure an integrated market with free flow of goods and services between these countries. Last year, India decided to not join RCEP at the last moment over worries about adverse consequences on Indian farmers and traders.
“India not joining RCEP is a big mistake. Asia is the growing part of the world and this is the part of the world we have been wanting to integrate with,” said Ahluwalia.
“What sort of a face does India present in east Asia if it says it cannot compete with other Asian countries,” he said, adding that he hopes the government would reconsider its decision.
‘No ministerial control over data’
When asked about concerns around the credibility of Indian statistics given recent instances of delay or scrapping of unfavourable data, Montek Singh Ahluwalia said clearance of statistical data should not be subject to ministerial control at all.
“The government has recognised that people are worried about the credibility of Indian statistics. It has set up an advisory committee and it has excellent people on it. But it is only an advisory committee. India needs a world class statistical system run by professionals,” he said.
He pointed out that the Congress-led United Progressive Alliance government had set up the National Statistical Commission (NSC) to have a final say on all statistical data, and also moved the National Sample Survey Office out of the Planning Commission.
“We (UPA) should have given the National Statistical Commission statutory backing,” he said.
With no statutory or legal backing, the decisions of the NSC have been overruled by the government in the recent past raising concerns about government interference in statistics that portrays the regime’s performance in a negative light.
The draft bill released last year by the government to empower the NSC proposes to give the government final say over all data releases.
“Survey data is not easily manipulated. But in the case of the employment survey, the data was not released until after the general elections. The statistical system should have pre-determined dates of release,” he said.
He was referring to the jobs survey data, which was reported by Business Standard in January last year. The Modi government released it in May only after being re-elected to power.