Address trust deficit, joblessness to savage economy: Maira

India can become a superpower if two important issues are dealt with, says Arun Maira, member, Planning Commission of India.

In a panel discussion on CNBC-TV18, Former RBI Governor Bimal Jalan; Aditya Birla Group Chairman, Kumar Mangalam Birla; Arun Maira and Network 18’s managing director, Raghav Bahl shared their views on the country’s economy and the way forward from here.
Maira says, "One way is to keep handing out at poor people and give more and more to them, but that will lead to the fiscal problem that we are already facing. The second way to include people is what you were hearing from the people themselves, they want jobs. They want to create enterprises, because then they are really included in the growth of the economy actually." Below is the edited transcript of the panel discussion to CNBC-TV18. Q: Being here in this studio brings me back to a conversation Raghav and I had here a couple of years ago when we were talking about India, the comparisons between India and China and whether India will be able to fulfil its aspirations of being a superpower and then you had spoken about escape velocity if India gets its governance and its politics right and today we are exactly at that crossroads and we are going horribly wrong as far as both those issues are concerned - politics and governance. Let me start by asking you about that and where we currently stand today? Bahl: I must say the last couple of years have been most disappointing. I thought from the 2008 crisis to 2010 we had done a good job of getting ourselves out through a strong stimulus program. In 2010 when I thought the government needed to withdraw and allow other forces to takeover, essentially private investment and private enterprise, instead of doing that the government expanded its base. Hence, the balance sheet expanded.
Along with that we saw a whole policy paralysis, but for me it was really a decision making paralysis. I do not think there were too many policies which were stuck. It was just that the government was unable to take a lot of decisions. Q: The point that Raghav made about fiscal profligacy and while the Finance Minister has several times reiterated that it is a red line, we will meet 4.8 percent as far as the fiscal deficit is concerned, the quality of the deficit number is what is being questioned at this point in time. How are you reading this? Maira: In the planning commission with a lot of inputs in the previous two years we had made an analysis of what the system looks like, what does India look like, not just in economic terms, but in social and political terms also. Q: For the first time a scenario planning is done. Maira: Exactly, what is important is what it showed. It said that we can go very wrong if we go down a path and we could start improving ourselves and become a superpower if we focus on inclusion and unemployment.
We have a choice about how we are going to get inclusion. One way is to keep handing out at poor people and give more and more to them, but that will lead to the fiscal problem that we are already facing. The second way to include people is what you were hearing from the people themselves, they want jobs. They want to create enterprises, because then they are really included in the growth of the economy actually. Q: And there has been absolutely no work done on that front. Maira: That is what I say that we have got to make the public discourse about are we creating enough jobs, are we creating conditions for enterprises to grow? Q: But it is not even in political discourse. How do we make it public discourse when even job creation is not the political discourse? Maira: Thank you for putting it into a public discourse through this medium which is well viewed by people who can influence policy in this country. Secondly we have to change our view about implementation. For implementation, we have got to get down to lower levels of execution. We have created this Cabinet Committee on Investment (CCI) which is sorting out a few things. But how many more things can it keep sorting out? Q: But we should not have had the need to do that in the first place. Maira: Exactly. These were the two things and we said they have to be fixed. The third thing was institutions, institutions which are involved in both these matters as well as other public matters.
People have lost trust in institutions in this country and we cannot be in this condition where people say, ‘I do not trust big business, I do not trust government and certainly not the politicians’.
This is why this country is not going to be getting itself together. In those scenarios we pointed out ways in which all these three things could change and those scenarios were then used by National Council of Applied Economic Research (NCAER) to project what India's growth rates would be under three alternative scenarios. We said two years ago that India's growth rates could start collapsing down towards 4.5-5 percent if we keep persisting with this scenario that we called the story falling apart. Q: We have talked about the twin deficits. We have talked about the trilemma or quadremma facing the Reserve Bank of India (RBI) at this point in time. This business of the RBI being able to maintain its autonomy, its independence and yet you have the Finance Minister saying if we have to walk the growth path alone, we will do it and that is a challenge we will undertake all by ourselves. There is need for more harmony, better coordination between the government and the central bank. In your time a lot of people say that you were able to walk that tight rope much better than anybody else has. How do you ensure that, because clearly there seems to be a breakdown and a disconnect between North Block and Mint Street? Jalan: There was. Q: So you think it is better already. Jalan: Hopefully, it was and hopefully it would get better, because it is absolutely within our power. What you need is harmony. You are conducting this particular interview, you must have checked with your colleagues that have you got the camera right, somebody says I am not free then you would agree that okay do not do it right now, we will do it after 10 minutes. So, the whole functioning of the government and RBI is not about differences, not about problems, but of walking together that once we agree, once we have discussed, we have discussed behind curtains as it were, but when we beam your TV then it must come out as if we are conducting it properly.