Economy may touch 8% average growth: Maira

Sufficient action has not been taken to revive the economy, says Planning Commission member Arun Maira. Talking to CNBC-TV-18 , he says that if appropriate and timely action is taken, we could touch 8 percent average growth in the five years of the 12th Plan.

He says there has been a grinding slowdown of implementation of projects, policies, and agreements. Below is the edited transcript of his interview with CNBC-TV18 Q: Let me start by asking you about the general slowdown in the Indian economy. There is a sense that things have gone from bad to worse. For the very first time the planning commission had put out projections on what the Indian economy could look like if there was no policy intervention and no reform action. It pretty much seems like the economy is going to be heading towards the worst-case scenario of under 5 percent growth rate? A: Yes unfortunately it does appear like that, and for reasons that were anticipated in those scenarios. We had determined the actions are that are necessary to get the plane to lift and to keep flying high. I think we haven’t taken those actions sufficiently. So, it is a situation of concern right now. Q: It is a situation of concern. Even today the government is putting on a brave face and saying that we will get a growth rate ahead of 6 percent.  6.7 percent is the most optimistic scenario that the government has put forward. Do you believe that anything above 6 percent is impossible now? A: If we do certain things we know that we could get to almost an 8 percent average growth in the five years of the 12th plan. If we focus on those things we will get the best outcome that we can get in the present global circumstances. What are those actions? In a nutshell, they are about if I can say fixing the wiring of a place. I think there has been too much hype and emphasis, much of it from the financial markets. The real investors have been quiet for a while and these include Indian firms who have been investing and growing in India for decades. Why are they not investing more in the country? Why are they putting their investments outside? So, it is not a matter of opening up the economy, inviting more investments. It is about conditions inside the economy which are not producing results for investments that have already been made. So, there has been a grinding slowdown of implementation of projects, policies, agreements and even when policies are announced they get unraveled because they are no agreements around what needs to be done. It is about implementation. Q: As you pointed out yourself that it is not just about attracting foreign investment because foreign direct investment (FDI) is clearly not a panacea to all our problems, it is also about enabling domestic investment. But we haven’t seen that happen even though we have had the CCI being setup, some decisions have been taken but the capex cycle continues to be stalled. There is a sense that it is a little too late, the kind of changes that we require are surgical it is not incremental changes that we need. Even at today's meeting for instance we are given to understand that there were some specific measures decided as far as reviving the textile sector, the steel sector or the civil aircraft manufacturing sector are concerned. But all of that can only be implemented at least 12-18 months down the line. What happens now, what happens in the short-term crisis that we are facing currently? A: Do the things that need to be done which we have just described very broadly and do them in a very determined fashion as I said. We can lift gains after these 12-18 months. That is what our projection shows that the growth can be quite high in about three or four years time provided we do what we know that we need to do. When there are bottlenecks they should be removed. Good management will make the present investments which are not very productive produce more, projects move and that will invite more investments in the country. Q: None of the stuff that was discussed in today's meeting is new stuff. It's not something that we don't know about. These issues have been on the table for years now. We are talking about the same issues: land acquisition, faster environmental clearances, we are still stuck at the exact same place. What gives you confidence that even in the next 12-18 months we will see some of these changes that were decided upon today being implemented considering the fact that this is a lame duck government?

A: We knew long time back that we have got environmental problems and land problems. Let me say that for the last 25 years we have been talking about labour law reforms. There is no point just pointing out the things that need to be done, you got to start doing those things and then to do those things you got to build the capacity to those things. What are those capacities? As I pointed out we are having a lot of contentions between different stake holders, between different agencies and government. Now are there ways to put them together, to compel them to think about something larger which they have to get together and to find solutions and implement them, there are ways to do these. We are recognising that that’s what we have to focus on. Its not once again saying lets debate the land issues, lets debate the environmental issues, lets debate whether interest rate should be up and down. Those are on the surface of what needs to be done, but how are you going to do it and are you applying yourself to how to do it.

I am finding that we are beginning to focus on that and we know how that needs to be done. There are things that will have to be done at the high level, at the cabinet level to break bottlenecks there, so, the cabinet committee is a good thing that’s been setup. Then we have got things as I might say at the intermediate level which is like at the state levels and those need to be done and focused on and there are ways we are finding as we go into the states. As you known some states recognise it and they are taking credit for the fact that they are good implementers and others recognise that they could also be good implementers by approaching problems the same way. There are many more things which are much lower down on the ground and they could also be done by applying systematic ways to get them done.