- As a development economist what is your view on the Indian economy?
Since the early nineties, India and China are the two most talked about countries in the world which have made tremendous progress. In India’s case, the problem is first of all growth that translates into jobs and improvement in the quality of life of ordinary people. That has been a challenge for the last decade or more than that, although that is not government specific. In terms of the growth process the challenge is in generating enough employment opportunities because otherwise you have the problem of what people say, of becoming a Silicon Valley surrounded by sub-Sahara Africa. That’s the two-India that is being talked about. And you can see it everywhere.
- Does the huge inequality of income cloud the world view on India?
I think inequality is just one of the symptoms. If everybody was doing well and some people are doing less well it is less worrying than an inequality where there are many people on the margin of starvation and some in the billionaires list. Inequality becomes a problem when the guy on the wrong side is really not well off. It is almost like within a family if one sibling is doing fantastically well and others are on the verge of poverty, how can you say the family is doing well. As an emerging economic power you cannot hope to impress without taking care of the most obvious issues.
- So you do not believe in the India growth story?
I am just reading the reality and not trying to put too much of my value judgment here. But in any situation if one person is doing so well and the other so badly how can you say growth? An overall GDP growth of seven per cent is not very hard to do. It can be generated with 10 per cent of the population’s income doubling and remaining 90 per cent of the incomes remaining the same. But don’t equate the aggregate growth rate to what is happening to the people. For that you need to show real wage growth, employment growth and falling poverty.
- What is your take on the seven per cent GDP growth controversy?
We have had more growth rate revisions in the last eight months than it ever happened. Essentially all of it is somewhat tortured way of showing that India has grown 7 per cent. If you look at the numbers in the last 15 years, India has grown above 7 per cent in all years except for the year of the financial crisis 2008-2009, the last three years of the UPA rule and post- demonetization where the growth dipped below seven per cent. So for a government to claim that I am doing above seven per cent is like a student saying I’ve got 50 per cent marks and I am doing brilliantly. The macro-economic numbers are at best just above average Also the government is suppressing the NSS report. So clearly the unemployment numbers are not looking good or why would it be suppressed? Where the government has done good work is in GST, the bankruptcy law and also in certain service delivery, e.g the Jan Dhan Yojana. I don’t know why these are not being highlighted more instead of talking on the seven per cent growth that is average.
- What do you think of the economic policies of the government?
I think very few economists would say that suddenly making 80 per cent of the currency invalid is a good idea. It is almost like you have to find persons who defend demonetization. Cleaning the dirty tank once will not give you clean water unless you find the source of the leak and change the plumbing. So demonetization was a mistake in theory and in practice it didn’t work out. The Make in India drive is a good slogan which needs thinking clearly about the reality that exists. One of the basic principles of economics is that you have to make things that you are good at. That is the reason why different regions specialize in different products. India has relatively cheap labour. Therefore if other countries have capital they should be allowed to set up factories here.
- You are an advocate for UBI when the Congress party has come out with similar NYAY scheme?
I believe in having a social security net and my talk comes from the belief that UBI is best suited to reduce abject poverty and hunger.