Tuesday, July 13, 2004
Montek walks the talk
The Indian Express has posted online a full transcript of last weekend's episode of "Walk the Talk" on NDTV, which featured the chief editor of the Express (Shekhar Gupta) interviewing Montek Singh Ahluwalia, one of the mainstays of PM Manmohan Singh's dream economic team. Here are some excerpts.
In my view, everything that we have seen suggests that in the area of the modern side of the economy — industry, the process of globalisation, opening up the economy to trade — by and large, the economy has responded well to the government’s initiatives. I think that if you see, we have got new sectors where we’ve shown competitiveness, not just software, the farmer, auto components — you know the modernisation of the automobile industry is the result of a series of measures taken in the early 1990s and as a result what you have got is an auto-components industry which is largely homegrown. These are smaller firms now producing world-class auto-components.
I think we are at the beginning of what could be a phase, where many more Indian suppliers will enter what is called the ‘‘original equipment market’’ in the automobile sector in the world. Those are measured gains. And I think those policies have worked well. Of course, you need to continue some of the financial sector reforms — capital market etc. where we are lacking and there are some important gaps. Number One: You can’t have your 7-8 per cent growth, you can’t start trying to catch up with China with the infrastructure we’ve got. I mean India’s infrastructure is sub-standard. Let’s be clear about it. Until we recognise that, we are going nowhere. This is one big area. Infrastructure is both rural and also aiming at the modern economy.
Rural infrastructure is not going to come except through public investment. Let’s be clear about that. On the other hand, and some of the modern infrastructure, like, the major road networks — we can introduce certain elements of market economy like tolling of roads. But in my view, an overwhelming part of the major road networks in India will have to be built in the public sector through the existing mechanism. But remember, we are talking about four-laning the Golden Quadrilateral — go to China and see what they do.
If we are aiming at 7-8 per cent growth, if India is to going to be a major emerging market economy, four-laning is ground level zero. We ought to be planning now for six- and eight-laning, not the whole quadrilateral, but the densely traffic portion. The other class of areas...there is a lot of modern infrastructure where we have to bring in private investment. It can’t, and shouldn’t, all be done by the public sector.
we have been experiencing a deceleration of growth in the 1990s. In the first several years after the reforms began, we achieved a growth rate which averaged more than 6 per cent. Since then, in the second half of the ’90s, the average growth decelerated. I mean last year was very good — 8.1 per cent — very good. But the average shows a deceleration. So really, the target is how do we get from what is an average of less than 6 per cent to something like 7-8 per cent. This is where the hard decisions would be needed. Now, I would suggest the following: No. 1, I don’t believe we can get the faster trajectory unless we take care of what are now glaring deficiencies in the social sectors of health and education. As I said, this is going to require two things: One, more resources which the CMP talks about. It also requires restructuring the way the services are delivered and in that sense, the way the plan is organised.
Montek sort-of addresses the issue of a market economist heading an anachronistic sounding agency known as the Planning Commission (which does sound like a dreadful Soviet/Orwellian nightmare).
You know the Planning Commission, the name may sound very old, but there are some key tasks, which either the Planning Commission, or somebody, would have to perform. What are those tasks and what do we use planned resources for? The amount is huge. I mean, India’s total planned resources through the budget is, to give it a global flavour, more than twice the total lending the World Bank does for the whole world. So, the issue of how this money is used...
In my view, everything that we have seen suggests that in the area of the modern side of the economy — industry, the process of globalisation, opening up the economy to trade — by and large, the economy has responded well to the government’s initiatives. I think that if you see, we have got new sectors where we’ve shown competitiveness, not just software, the farmer, auto components — you know the modernisation of the automobile industry is the result of a series of measures taken in the early 1990s and as a result what you have got is an auto-components industry which is largely homegrown. These are smaller firms now producing world-class auto-components.
I think we are at the beginning of what could be a phase, where many more Indian suppliers will enter what is called the ‘‘original equipment market’’ in the automobile sector in the world. Those are measured gains. And I think those policies have worked well. Of course, you need to continue some of the financial sector reforms — capital market etc. where we are lacking and there are some important gaps. Number One: You can’t have your 7-8 per cent growth, you can’t start trying to catch up with China with the infrastructure we’ve got. I mean India’s infrastructure is sub-standard. Let’s be clear about it. Until we recognise that, we are going nowhere. This is one big area. Infrastructure is both rural and also aiming at the modern economy.
Rural infrastructure is not going to come except through public investment. Let’s be clear about that. On the other hand, and some of the modern infrastructure, like, the major road networks — we can introduce certain elements of market economy like tolling of roads. But in my view, an overwhelming part of the major road networks in India will have to be built in the public sector through the existing mechanism. But remember, we are talking about four-laning the Golden Quadrilateral — go to China and see what they do.
If we are aiming at 7-8 per cent growth, if India is to going to be a major emerging market economy, four-laning is ground level zero. We ought to be planning now for six- and eight-laning, not the whole quadrilateral, but the densely traffic portion. The other class of areas...there is a lot of modern infrastructure where we have to bring in private investment. It can’t, and shouldn’t, all be done by the public sector.
we have been experiencing a deceleration of growth in the 1990s. In the first several years after the reforms began, we achieved a growth rate which averaged more than 6 per cent. Since then, in the second half of the ’90s, the average growth decelerated. I mean last year was very good — 8.1 per cent — very good. But the average shows a deceleration. So really, the target is how do we get from what is an average of less than 6 per cent to something like 7-8 per cent. This is where the hard decisions would be needed. Now, I would suggest the following: No. 1, I don’t believe we can get the faster trajectory unless we take care of what are now glaring deficiencies in the social sectors of health and education. As I said, this is going to require two things: One, more resources which the CMP talks about. It also requires restructuring the way the services are delivered and in that sense, the way the plan is organised.
Montek sort-of addresses the issue of a market economist heading an anachronistic sounding agency known as the Planning Commission (which does sound like a dreadful Soviet/Orwellian nightmare).
You know the Planning Commission, the name may sound very old, but there are some key tasks, which either the Planning Commission, or somebody, would have to perform. What are those tasks and what do we use planned resources for? The amount is huge. I mean, India’s total planned resources through the budget is, to give it a global flavour, more than twice the total lending the World Bank does for the whole world. So, the issue of how this money is used...
