India Better Placed than Most Nations, in Position to Deliver Domestically Driven Growth: CEA Nageswaran

“It’s not about Washington’s economics, this is really about Indian middle-class economies for sustainable financing for households and government,” said Bengaluru’s Chief Economic Adviser (CEA) V Anantha Nageswaran on Friday.

Speaking at an India Foundation event, Nagswaran also said that the nation “was in a better position than most countries in the coming years to achieve domestically driven growth” and that the move towards privatization and asset monetization was a paradigm shift after more than two decades.

To achieve the kind of growth rate that would take India to the status of a middle-income economy in the next twenty years, he said, it needs an active financial sector capable of providing funds for development.

“Fortunately, in this sense, we have had a rough patch in the last decade. The banking system has been over-lending, the corporate sector has borrowed too much and we have spent the greater part of the last decade cleaning up balance sheets everywhere – in the financial system and the corporate system. For this reason, In this decade, with central banks around the world tightening monetary policy, India is in a better position than most countries. Because we are paying our share of the growth dues of the last decade as the financial sector has been rebuilding. “We are in a position to achieve growth,” Nagywaran said. Paid locally – that’s an important thing.”

privatization and monetization of assets

The Environmental Protection Agency said that even with the spread of the Covid pandemic, the government has seized the crisis as an opportunity. “For structural reforms, industrial policy, incentive schemes, rational corporate tax rates and rules on start-ups and business have been simplified, regressive taxation has been ended and after a gap of more than 20 years, India has returned to privatization. This has not been attempted in the past two decades,” he said.

The privatization of Air India was a landmark exercise and an important paradigm shift, Nagswaran said. The asset monetization system mainly improves the balance sheet of the government. “As we retire assets and transfer them to private hands, we will also cancel liabilities, lower debt ratios and lower the cost of capital for the private sector,” said Nagheswaran.

He said it was very important to focus on financial prudence and financial sustainability. “This is not about Washington’s economics, it’s really about Indian middle-class economies for sustainable financial resources for households and government,” the EMA said.

responsible economics

It is all about “responsible economy” as one progresses, Nagswaran said, and the same should be on the part of all systems of government – local, central, state, as well as the private sector. For government, there should be five factors. The European Energy Agency said fiscal prudence, reforming the energy sector so that the inconveniences are viable and ensuring that there is no need to worry about the availability of coal as a raw material for power generation.

He also said that “the government as a litigant should be a last resort”, and advised that with school education severely affected by the shutdown in the past two years, making up for that is important. “What I hear from many is that students show a lack of attention and poor social skills – and that may have a mid-term effect on learning new skills. Compensating for those two years is also part of a responsible economy,” CEA said.

He said that a responsible economy is also about the private sector investing little in research and development (R&D), which is vital if India is to become a meta economy in the next 25 years. The complexity of manufacturing should increase. The private sector has to do much more.”

He also referred to the attitude towards public health saying that the latest government surveys have shown that the level of obesity in Indian adults is of concern. It was said that China would be gray before it became rich. In India, I don’t want it to be a situation where India becomes unhealthy before it becomes rich. The private sector should ensure that food labels are placed, which is very important to warn people about what they are consuming,” he said.

Nagywaran also said that the private sector should ensure that it pays for MSMEs (MSMEs) on time.

Indian economic transformations

The CEA said the Indian economy has gone through multiple transformations in the past 70 years, with the first whiff of economic liberalization under then Finance Minister R. Venkataraman in the 1980s, and massive liberalization in 1991.

“In 2004, we had a new government that focused on enacting several social benefit schemes and bundled them as empowerment and constitutional rights – such as the right to food, education and employment in rural India. This was the 2.5 Indian economy,” he said.

In 2014 – the National Democratic Rally came to power and this government tried to reform the factor markets – land and labour. There was also a belief in the formalization of the economy and in 2019 we saw confirmation of that. Formalization opens the doors to finance and small, micro and medium enterprises. Reforming factor markets and formalizing the economy – that was Economics 3.0,” said the CEA.

“Then came from 2015 to 2016 onwards harnessing public digital goods — Aadhaar, Jan Dhan, GST, and a unified payment system. This takes technology to a different level. Unlike in the United States, where the technologies were developed by the private sector and their fruits have remained in the hands of a few Entrepreneurs, in India, these foundations and technical backbones are developed as generic digital products. The reform or platform of digital goods in India is in fact shaping the 4.0 economy.”

“Right now, and hopefully, as we enter the post-pandemic era, the Indian economy is preparing for its fourth edition and this will shape the future of this country for the next 25 years,” the EPA said.

Nagheswaran cited a recent Economist article in which he said she reluctantly elicited compliments and outlines certain elements of how India’s economy has been shaped. They have identified four pillars that will support growth in the next decade. Single national market – GST. Industry expansion and transition to renewable energy, shifting supply chains away from China. And a high-tech social welfare safety net for hundreds of millions enabled by technology without leakage.”

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