Govt should focus on manufacturing sector: Bimal Jalan

Excerpts from India Tonight on CNBC-TV18 Watch the full show » Nifty BSE | NSE 29/05/12 Are Mutual Funds betting on Nifty?

Q: Let me come back however to other reform measures that the government is toying with. In the President's address they've committed themselves to raising insurance caps, to some measure of banking and pension reform but as you know the promise to raise insurance caps was first made in Mr. Chidambaram's budget of 2004. Five years later it is not implemented, he is still talking about it - if this time around again these promises remain just promises and don't get fulfilled would there be credibility questions about the government?

A: Credibility - yes - but I think we need a consensus and a consensus has to be developed and in my mind whether it is 40-49-50-30% is of not great importance in terms of actual action on the ground. So we need a political consensus, I hope that would develop.

Q: There was an idea that was made to us specifically yesterday by a former finance minister Yashwant Sinha. We were talking to him about subsidies and he said that he had come to believe through his experience that the present system of ration shops etc are simply wasn't working, leakages were enormous and as a result the wastages were fantastic and he felt it much better, since we have well developed electronic means in this country was to give every single individual in need a cheque directly every month. Nandan Nilekani's UID system will help when it comes into being and let that person choose to buy where he or she wants and hopefully he will buy food rather than alcohol and its for them to choose and that way you reduce the leakage and target the subsidy to those who are needed and you will improve the end product?

A: Yes and one of this solutions is suggested and some countries have experimented with it successfully and some unsuccessfully also for the reason that you mentioned, that the money doesn't go into food but in societies where meals and alcohol are dominant but that's not the issue and I would still prefer a system of cash transfer than a system where the food doesn't reach the poor and you spend Rs 3.40 according to the planning commission for every rupee that you deliver to the poor. Its surprising because its three and a half times through the ration shops to get one rupee reach the BPL families. So obviously the present system is bad but the reasons are not only this fact that you are giving food and not cash but also you have a system where by you have three different prices depending on who you are and where and what you are. So the system is complicated in a way that any solution is better than doing nothing.

Q: Do you think politicians not just this government but politicians as a whole have the courage to switch dramatically to a straight cash transfer system?

A: No, but you can start with experimentation. You can start on a pilot basis as to how it works.

Q: Chidambaram said that he would do that almost three-four years ago. We have no idea whether those pilots have happened and how they work?

A: Exactly. So, courage doesn't come from wanting that there should be courage. If you a leader and you want to do it, you should do it and then prove that it has been done. So many things haven't been done in our society.

Q: Let's hope the leaders are listening to you?

A: If it doesn't work, change it.

Q: There is nothing wrong in trying and failing. It is better than not attempting anything new?

A: Absolutely, if what you are doing is not working.

Q: Would you also say that if the government were to try this, the opposition should be supportive rather than just be critical for the sake of being critical?

A: Absolutely. Again it depends on how they are trying it. If they are trying it on a pilot basis, done in a transparent way, if it is done with information system being absolutely - daily information system as to how many people have been given money through the website or whatever, then absolutely.