1.1. The Ananta Aspen Centre held its second seminar in its ‘Economy & Policy’ series of events on 01 August 2019. The seminar was on the topic, ‘What are the priorities for the economic growth for India 2019-20? – The Union Budget and After’. This seminar brought together three economic policy experts who shared their thoughts on the union budget 2019 (“Budget”), which was presented by the National Democratic Alliance – II government (“Government”) in parliament on 05 July 2019. The session was moderated by Tarun Das, chairman of the Institute of Economic Growth and a founding trustee of Ananta Aspen Centre. Vihang Jumle, associate at Ikigai Law, attended the event. This blog post summarises the discussions that took place during the seminar.
2. Key points from Speeches of the Panellists
2.1. Rakesh Mohan, senior fellow, Jackson Institute for Global Affairs, Yale University.
a. The Government needs to acknowledge the worsening condition of the Indian economy.
b. The Government clearly lacks a commitment to economic growth. While both the Budget and the economic survey of India 2018-19 spoke about economic growth, the Government put no measures in place to secure the much-needed Gross Domestic Product (“GDP”) growth rate of 7-8 per cent.
c. All the previous five-year plans successfully attained 90 per cent of their growth targets, except for the five-year plan of 2012-17, when the National Democratic Alliance – I government was in power.
d. India can attain the same per capita GDP as that of China if it secures an 8 per cent growth rate for the next 20 years.
e. The Government’s ‘business as usual’ attitude needs to be replaced with a clear focus on economic growth in India.
f. Slowing investments and minimal growth in production, imports and exports of capital goods, and household savings have weakened the confidence of investors in India.
g. The media needs to do a better job of reporting the worsening economic situation of India.
h. Agricultural, financial and fiscal distress can only be solved by a “full-blown reform”.
i. Ideally, the tax-to-GDP ratio should have increased in the last 30 years, as a result of rising income levels. However, this ratio has remained fairly unchanged.
j. The Government needs to maintain consistency in its reporting of official national statistics.
k. The Government needs to focus on improving tax compliance, as against increasing tax rates.
l. The Government should refrain from foreign borrowing.
m. Mohan’s publication, “Moving India to a new growth trajectory: Need for a comprehensive big push”, provides a deeper analysis of the Indian economy.
2.2 Ashok K. Bhattacharya, editorial director, Business Standard.
a. The Government has an enormous amount of political capital, and it is hungry for more political capital.
b. The Government is not willing to spend its capital on economic policy management.
c. The Government has resorted to a ‘welfare-ist’ approach towards economic management.
d. The stress on Government finances has led to increased tax collection.
e. The Budget only proposed short-term fixes, whereas India is in need of long-term reforms. The Government should refrain from performing “bypass surgeries” on the economy.
f. The Government appears to be expanding its ambitions and may reduce the funding of state governments to fulfil its agenda.
g. The Budget favours foreign borrowing and is not focusing on export-led growth.
h. The Government needs to work towards building investor confidence.
2.3. Nitin Desai, chairman, The Energy & Resources Institute and trustee, Ananta Aspen Centre.
a. The Budget does not portray the Government’s overall agenda clearly. The Government lacks an understanding of the economic issues in India.
b. The Budget clearly indicates the Government’s inclination towards foreign borrowing which should be avoided.
c. The national debt stood at 56 per cent of India’s reserves.
d. The Government is heavily dependent on foreign investments.
e. The Government has shown its growing tendency to bypass federalism in India.
f. The corporate sector’s confidence in the Indian economy is at an all-time low.
g. The Government needs to focus on export-led growth.
h. Efforts have to be made to increase investments from the private sector and to restore the corporate sector’s confidence.
i. A targeted industrial policy needs to be introduced with a clear focus on increasing Indian exports.
(Authored by Vihang Jumle, Associate, Ikigai Law with inputs from Arpit Gupta and Tuhina Joshi, Associates, Ikigai Law.)