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We must also produce things that all Indians consume and that all Indians want to consume. It is absurd to subsidize to help someone buy the five basic things. Something is wrong with this model. You must recognize and change that.
HARISH DAMODARAN: But if you look at the growth of rural wages, it was double-digit. Revenues have therefore increased significantly. The structural problem seems to be the last five years, because of demonetisation, the goods and services tax, and so on.
I do not agree. There was only one three-year period between 2005 and 2008, and I could be wrong in years when the consumption of the poorest 20% increased faster than that of the richest 20%. So, it's not about the last five years. Before the last five years, the last mile helped and there was a period of growth in farm wages. But I fear that these have developed because of the grant called MGNREGA. It was not a bad subsidy because it forced rural wages to increase by creating demand. However, you can not manage the fastest growing economy in the world and then set up an employment support program. The fastest economic growth must create jobs based on its own performance. The impetus was temporary, as will happen with every fiscal stimulus, every social badistance and compensation you distribute.
ANIL SASI: One of the trends observed over the past five years is the repeated retreat on tariff increases to protect the domestic industry. There are a number of sectors, such as telecommunications, where rights have been raised primarily to address the domestic industry's grievances, generally considered protectionism. Is that not what pushes us further down the road, the road you mentioned and we should avoid getting out of this middle-income trap?
Rates can do two things. They definitely make life more expensive for people or prevent people from consuming what they used to consume … If there is a 2,000% tax on airfare, a lot of us stop taking the plane. You will have to go back to the railways. Then you get angry at the services – delays, food, etc. Then we will start investing in improving the railways. It's a good way to go.
Now, if your tariffs are applied to industries where demand is inelastic, you will not consume less but you will pay higher prices. If I'm able to produce a cell phone at eight o'clock and the price allows me to sell it at ten … then the prices will go up for the consumer … This benefit-cost calculation must be done product by product and that's the same. is a hard job. Australia has the Australian Productivity Commission. It is a constitutional body that badesses your productivity and the elasticity of demand and supply for each commodity in Australia. This information is presented to the Parliament and, on this basis, economic policy decisions are taken. But we do not do this hard work. Someone imposes the tariff, something else does. In that sense, I am against (tariff) … If you are able to publicly justify why you are doing it and what the consequences will be – which will never be done – then I am for, although I may disagree with the principle. But it is not done and I do not like it.
LIZ MATHEW: Do you think that the programs put in place by the government to generate growth, like the skills development program, have not achieved their goal? [19659007] This is still a problem. It is very interesting to note that the discourse we have in this country is about patterns and objectives. It happened in the communist countries, no? When the Prime Minister said he wanted to double X's farm income, he was changing the paradigm. I think this paradigm shift was bipartite … The goal of agriculture is to make sure that it is a viable business model. It's a paradigm shift. There is no diet there. We are trying to re-evaluate the type of interventions we are doing in agriculture with these objective functions in mind.
The second is low-cost housing. The idea that we should provide housing at affordable prices to people earning the minimum wage and above, and do it without any rationing, is now part of the government's mission … But this is no longer what people are focusing on. On the other hand, we use the word "schema" everywhere. We do not adopt the economic logic and badytical efforts necessary to carry out our major policy proposals.
I shuddered when I saw that all the schemes' initiative had been reduced to the creation of a new ministry. For me it's the kiss of death. If we say that India needs skills, establish a ministry of skills, then everything will boil down to what I call proto-communism, where you create institutions and recruit people.
We are a two trillion dollar economy and such rudimentary approaches will not work. We will have to do the hard work of identifying exactly what we want to do. It is not a question of spending money, but of doing things intelligently and changing policies. This is not expensive; the plans are expensive.
SUNNY VERMA: The Prime Minister's Advisory Council on the Economy was formed after a net slowdown in the economy. Did the council advise the Prime Minister on economic matters or did he shrink because of politics, elections, etc.?
The President of the PMEAC would be interested in answering this question.
ANIL SASI: But was the government receptive to the suggestions of the PMEAC?
I can not resist this statement … There is no cause and effect between the two. Some of the initiatives that have been taken are in line with certain ideas (the PMEAC). Doubling farmers' incomes and affordable housing for all … These are the levels at which this happens. Say, there is a person living in one of the poorest districts of India. If I impose tariffs, or not, will it make a difference for this guy? If so, should I opt out of the pricing work? So, this kind of medium term thing you can not ask for in the short term. In the medium term, you can do it because you have the equipment and you have the desire and the political ambition to transcend the current constraints and work for that situation … I think all the political parties are missing. There are no social movements to push us towards this medium-term goal, and so it will have to come from politicians … By nature, bureaucrats and technicians like me, our bread and butter talk about the long term. If I have to sell my services as an economist, my best choice is to forecast the interest rate in October. My best bet is not to talk about the person in the poorest district and how politics will change his life. And that's what people pay you in the short term. Dhandha short-term main chalta hai (Our work is for the short term). But politics, development and the economy should be medium term.
VAIDYANATHAN IYER: Your observations on the structural weaknesses of the economy show that, on the one hand, we are not able to provide services, which are imported. – for the rich, and on the other hand, we do not create affordable services for the poor either.
This is not how I will describe it. First of all, I do not talk about the poor. I am talking about the non-poor who are not rich. In India, the economy is not difficult, but the whole of political sociology imposes major economic constraints. The consequence is the inequality of opportunity and participation to generate growth. I will give three examples – railways, higher education and urban services. When the elite abandoned the railways, these collapsed in terms of service and quality. Same thing for higher education. For example, many of you must be migrants in Delhi. You are not born here. In the past, if you had finished your career in Delhi, that did not mean that you would retire in Delhi. We would retire to Bhubaneswar, Sambhalpur, etc. The advantage was that when someone like you came back and something in the urban services was not working, you called the district magistrate and they took note of it. These communities would be built. But intercommunity relations break down when growth is uneven. It is down in the railways, higher education, etc. How many of you are returning to their small hometown? And why would you go back there? The quality of life and the income are much better here. The result is a consequence for every small town, every train, every higher education institution in the country. So it's not the rich-poor division, it's about those who have benefited and those who have not benefited. What decision did the beneficiaries make and the consequences for those left behind? This is the challenge we face.
AANCHAL MAGAZINE: You mentioned structural problems, markets that do not lead to perfect results, uneven distribution, and so on. In such a situation, if the government must spend to stimulate growth, how can it achieve its fiscal objectives?
If you have a structural problem, the solution is not to spend money. It's about increasing productivity, making government interventions more effective … If you want to improve the quality of agricultural extensions in India, you do not have to spend as much money as two airports. I am pleased that the government is financially restricted. The job of government is to make smart political interventions, not to spend money. I am talking mainly about central government, but also state governments. In addition, the responsibility to remedy this constraint can not be left to the government alone. Both the private sector and society will have to change. We need a national conversation.
BANIKINKAR PATTANAYAK: The new methodology for calculating GDP raised questions. Where did the government go wrong?
I have no idea. I am not a statistician. As an economist, I know that all figures are estimates. Now which estimate is good or bad, ask a statistician. But in terms of how the government could have handled this better … It would have been wise to ask the professionals to comment on these issues, positively or negatively, and then to support the conclusion with professionals, statisticians, and researchers. consumers of data deemed credible. . The affairs of the public service (officers) and others who make these statements are unfortunate. It has nothing to do with a political party, it has been going on for over 20 years. This is wrong because the Indian statistical system is a credible system. The tax figures we have published can be volatile but they are credible.
It could have been much better managed, but there is no reason to doubt the intrinsic credibility of GDP or other statistics. There are good reasons for competent people to lock themselves in a room and discuss, as was the case before Facebook and Twitter. This luxury has been removed and we must recover it. Do some research, keep your mouth shut … It may take a few months but will be beneficial in the long run.
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