Growth was dipped below the 30 year average 

Growth was dipped below the 30 year average 

Context

The former Chief Economic Adviser on India’s current slowdown in economic growth and the mix of policies needed to reignite it

The former Chief Economic Adviser on India’s current slowdown in economic growth and the mix of policies needed to reignite it

A vocal critic of demonetisation

• I do not think it will confer any long-run benefits in terms of digitalisation because that is a slow, natural process.
• There is no way that an emerging economy like India, with more than half the population still living in the informal sector, can leapfrog advanced economies and get there by a simple policy intervention.
• The main damage of demonetisation is to India’s reputation as a professionally run economy, since it was an uncalled-for jolt to the market.

Consistent supporter of the other major reform, the GST

• The GST was needed but It has been poorly implemented
• For such a large policy shift, the planning and implementation design should have been much better.
• Also, it should not be too multi-tiered, which is both inconvenient and makes one wonder if this is a sign of sector-specific cronyism
• Once we go past these teething troubles, the GST should aid efficiency and growth 

Economy doing poorly

• India’s economy is doing poorly on several fronts. Consider exports — they have dragged, with India’s trade deficit with China growing rapidly. Exports did seem to grow well from April to November last year, with an annual growth of 12.3%
• But it was a time when several emerging economies did well and India’s performance fell short of many other nations, like Indonesia and Vietnam whose exports grew by 16% and 24%, respectively
• India’s long-term prospects are very good, but to get out of the current morass, it needs a professionally designed combination of fiscal, monetary and international trade policy initiatives

Case for a focussed stimulus package now

• India’s growth has dipped below average for the last 30 years.
• Given that over the last 30 years India experienced a fairly steady increasing growth rate, this is something that should worry all well-wishers of India.
• We do need a stimulus, which needs to be professionally designed and coordinated with the Reserve Bank.

Increase in obscurantism

• There is indeed reason for concern about the rise in obscurantism
• A country grows faster when you have a churn of ideas. If you want India to do well in the long run, you have to create space for that.
• Its all right with a Minister believing that evolution did not happen, and that Darwin was wrong (referring to Minister of State for Human Resource Development Satyapal Singh who said that the theory of evolution is ‘scientifically wrong’) as long as those who believe Darwin was right are not shouted down as anti-national.

On pseudoscience being propagated by those in positions of power

The state must support scientific temper.

• It will be a mistake if we put ancient medicine on a par with modern science. We should be proud of our intellectual heritage but it is foolish to claim that for every scientific breakthrough, we had done it first. This hurts a nation’s credibility
• Second, while we should appreciate our heritage, we must not take that to be the final word.
• Kautilya’s Arthashastra was a major work in early economics. But it will be foolish if we give ideas in that ancient text precedence over modern economics — be it the works of (John Maynard) Keynes or (Paul) Samuelson. We should feel free to contest these later thinkers but it will ultimately hurt us to silence them.
• I stress this as an appeal to our leaders — political, corporate and thought — for the sake of the nation, they must reject obscurantism and promote openness and analytical thinking.