Former Indian chief economic advisor Arvind Subramanian talked to The Indian Express on why economic indicators are serious, agreeing that NPA crisis was recognised late, argues 'suit-boot ki sarkar' (Suited-booted government) charge made economic resolutions difficult, and explains why boosting consumption is not the route to growth.
The talks took place in a new paper published by Harvard University's Center for International Development, where, Subramanian, former chief economic advisor, and Josh Felman, former IMF resident representative to India, have argued that the economy is facing various issues due to the current issues with economic slowdown and the Modi administration.
SANDEEP SINGH: As per your assessment, where are we in this slowdown trough right now?
On the trough, let me say three things. One, I don't think anyone can say we are going to come out in three or four quarters. My sense is that things have to get worse before they get better… Also, how quickly we come out is dependent upon what we do. Of course, the external environment is there, but you know, if you take measures that can increase confidence, start fixing the financial sector, the data thing, agriculture… It's in our hands, the government's hands, to some extent. But the actual timing, one cannot say anything here.
RAVISH TIWARI: On a political level, this government and the BJP seem to enjoy greater trust of political agents, the voters. But here is a finance minister who does major announcements and the economic agents don't seem to be impressed. Why are the economic agents not trusting the government?
On the economic side, for many years, we have had what I call the 'foresee' problem. Both public officials and the private sector have had a dampening effect because you fear there's going to be a foresee activity. This in turn comes from what? We've had a series of corruption scandals, so the people's, the economic agents', faith in the government kind of fell. So that relationship I think has been impaired for a very long time. So, in a sense, we are now in a situation where this is the cumulative legacy of many, many years, and it's not going to be easy to undo that… We need to have a situation where there's more policy certainty and much more friendliness.