Wednesday, May 1, 2013

“We had predicted it in 2005, but no one took it seriously”

Arun Maira, Member-Planning Commission, reveals to IIPM Think Tank’s Sray Agarwal and Ganesh Roy about why the need of the hour is to have a faster decision making procedure

B&E: The Indian economy is going through a slowdown. What’s the way forward for the economy now?
Arun Maira (AM): What is happening in the Indian economy is just a phase of an economic cycle and it is not going to be the situation forever. In the present scenario, the investors are shying away from coming to India but there is a dire need to understand that this slowdown is temporary. One of the main reasons for this picture is lack of power in decision making. Hence, the need of the hour is the ability to have a faster decision making module. The trust of our people in the government is shaky right now. It’s not only the case with India but in US too that people currently are low on confidence in the government and there too it is very difficult to bring reforms, whether health care or industrial. Both these nations are on the same page and the transformation seems difficult; but since the US has much larger economy they do not get much affected by investors. We at the Planning Commission perform tasks which do not change with these economic cycles – rather, we do a combined and collective research taking views from common people, environmentalists, people from civil society and many more and try to find out what could be the best possible outcome for any situation; and then we proceed from there. We had predicted long back in 2005 that the Indian economy will grow at around 8% to 9% growth rate; but none of the institutions took our prediction seriously; yet eventually we were right!

What policy reforms should we take to tackle the current issues?
AM: This is a fundamental thing and this has happened over the last 2 years and this has not happened overnight. We have predicted that if policy making and decision making are faster, we can achieve a growth rate of over 9% and we have done that. But again, we also have said that things if not done properly will equally affect the economy, as is the case that you see now. I agree with the fact that the economy is not in a good position; but if things like policy making can be done immediately, we can recover from this economic slowdown very fast.

The growth in the economy has made many persons rich but what about the lower strata of the society? They are deprived of the benefits of liberalization so the ultimate challenge for us is to bring these people into the main strata of the society. The political lock-jam which has happened is also one of the reasons for this condition currently.

The institutional and economic reforms if not implemented will make the scenario even worse than what it is prevailing right now. I am not talking about reforms like FDI in retail or the banking reforms but the way in which jobs are created in the country. It is a major issue of concern for us. For example, the main problem with the Naxal affected areas is that the things which were promised to them were never fulfilled; so to get those promised things, they take the help of arms! This is one example of a main policy failure which we have in our system as of right now.
 

Source : IIPM Editorial, 2013.
An Initiative of IIPM, Malay Chaudhuri
 
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