Society for Policy Studies in collaboration with India Habitat Centre held a lecture in the Changing Asia Series on “India’s Growth Prospects Over The Next 5 Years” .
Key Speaker: Dr.Shankar Acharya, former Chief Economic Adviser, India
Moderator: Mr. Rakesh Kacker, Director, India Habitat Centre.
Date: September 22, 2015
Venue: Gulmohar Hall, India Habitat Centre, New Delhi.
India’s Growth Prospects over the Next Five Years
The Society for Policy Studies (SPS), in association with the India Habitat Centre, organised a public lecture by Dr Shankar Acharya, former Chief Economic Adviser to the Government of India, on India’s Growth Prospects over the Next Five Years on 22nd of September 2015. It was the third lecture as part of the Changing Asia Series organised by SPS-IHC.
Dr. Shankar Acharya led the audience through the evolution of the Indian ‘growth story’ to give his personal assessment of the likely economic trajectory for India in the medium term. Presided over by Mr. Rakesh Kacker, Director of the India Habitat Center, the engaging presentation and lecture, followed by a question and answer session was attended by an overflowing Gulmohur Hall. Stressing on the need to learn from the past, the lecture began with a retrospective analysis of India’s growth curve.
With the figures from the past being indicative of India’s decent, stable economic success, Dr. Acharya drove home the point that the cumulative successes of the past bode well for India’s economic future. However—like there is one always—the former CEA was apprehensive of the possible scuttling away of this hard-earned progress should the domestic policies in India not be revamped to meet the current international and at-home economic requirements.
Necessitating the need for such economic projections, the speaker talked about the transformed international and domestic circumstances that call for such forecasts. Where the international economic health is giving-out mixed signals—in a recovering world economy but a slowing China – the changes in India too have prompted for such projections to be made. In particular, it is the winding-up of the Planning Commission that Dr. Acharya observed has been one of the major causes that demanded this thematic lecture as there “no longer exists an access to the official (economic) outlook or scenarios that plan documents hitherto used to provide”. Shifting to a new base year for measuring growth has become another reason behind these calls for estimates as “one cannot easily answer the question ‘How fast is India growing’”.
He said the growth rate of earlier years if measured according to the old Central Statistics Office (CSO) data and compared with the new data shows “big changes” in the growth numbers for those years. He showed the graphs for manufacturing and hotels industry, which indicated big upward changes according to the new data. This, he said, was a “source of really major concern among serious economists and statisticians in India… I’m not saying it is wrong, but till it (data source) is sorted out and we get comparable data going backwards, we are in a bit of a puzzle.”
Dr. Acharya, who is honorary professor at the Indian Council for Research on International Economic Relations (ICRIER), said when the NDA government came to power 16 months ago, there were “some promising initiatives”. These included capping of the cooking gas subsidy, railway passenger fare increase, the Jan Dhan financial inclusion, the move to bring in the private sector into defence production, among other things.
But he said in the last few months there was “a distinct slowdown” in the wake of the setbacks in parliament which led to abandonment of the land acquisition bill and the Goods and Services Tax bill not being cleared in the Rajya Sabha.
The promised disinvestment has seen nothing in action this far, heightening apprehensions about its possible abandonment too. The speaker also said the move to privatize airports in many metros has been dropped, which “does not square up with the campaign slogan of minimum government, maximum governance”.
On the other meso and micro fronts, a lot has been heard but little has been done. In particular, the efforts to tackle the mess in the state electricity boards have not been sufficient. The reach of the direct benefit cash transfer has not been extended to food, fertilizer and kerosene, despite the reach of the Jan Dhan Yojana, the Aadhaar cards and mobile phones, the former economic advisor said.
He also said the “revival of fiscal populism” and the coming 7th Pay Commission, the “big election package for Bihar”, the OROP and the inevitable demand from other sections of government employees would all add to the country’s “financial stresses”.
Combined with what is increasingly appearing to be an un-kept date with the promised reforms, the social (lack of basic education and healthcare facilities), infrastructural (weak physical basic infrastructure like roads, electricity, ports, railways) and administrative (dominance of public sector, misdirected approach to agriculture, inflexible labor laws) fallings of the past are bound to have a major impact on India’s growth story. Also, a very slow world economic growth that is expected to happen at a rate of 2.5-3% in the next two-three years (combined), India’s economic front is expected to take a hit on this count too.
On GDP growth from 2015-2020, he said while the Economic Survey has predicted 8-plus growth, with his own analysis and the “data doubts” his speculation was that it would be in the “5 percent to 6.5 percent range”.
He pointed out that unless India undertakes “very serious policy reform”, there will be no possibility of the country witnessing 8-10 percent growth. “And frankly, I don’t see any serious policy reform on the cards, and that is why we will not see an average of 8 percent in 2015-20,” he said.