Count on strategic divestments this year, says Arvind Panagariya

He further said that labour intensive sectors like textile, electronics, footwear need a big push.

“In the end, the greatest weakness of the Indian economy in the last several decades been that it has not generated good jobs, well-paid jobs,” he said.

Panagariya feels that these are pre-dominantly jobs in the labour intensive manufacturing industry, and hence, there is a need to create good jobs.Below is the verbatim transcript of Arvind Panagariya's interview to Shereen Bhan on CNBC-TV18. Q: Why do you think China is successful in exports? A: The scale why China today is at USD 2.3 trillion worth of exports is so successful, it is a scale. Q: What can the government do beyond tinkering with the foreign trade policy to try and boost India’s share in the export basket. Again in this context of Brexit people are seeing this is an opportunity for India because we can now negotiate directly perhaps with the United Kingdom, but what do you really see is being the opportunities and the need for intervention from a policy perspective? A: One needs to reduce risks in the market and so is suffered for a long period from a lot of uncertainties that come from the governmental policies as well and the other risks to, so we all need to work together to mitigate those risks, get the foreign investor also, the bigger opportunity I see coming is that China, now the wages in China are rising, they have actually raise in the last decade and half. The workforce is not declining. It is on the declining side of the demographic curve and is declining quite sharply, so the wages in the forthcoming decade in China are going to rise even faster than they have risen in the last decade and it is already doing it because the many of the sectors that use a lot of labour migrate out of China. It is happening, right now they are going to Vietnam, they are going to Bangladesh and even Myanmar, but not enough to India and that is what we need to change. Q: One of the risks facing the Indian economy specifically is the poor efficiency of the public sector, public sector banks burdened with non-performing assets (NPAs) today are much higher than the global average. The National Institution for Transforming India (NITI) Aayog has been tasked with putting together a list of candidates for strategic divestment. I understand that the first and the second list perhaps has already been presented to the Prime Minister. When can we realistically expect a strategic disinvestment to take place? A: So there are two issues, one report we did was about the closure of the sick firms, firms that are not performing and have had repeated failures of revival, I think they need to be closed down so that’s one list and the other one is to strategic disinvestment, so you will action happening in the next six months I will say, meaning that process is on, but you will see the action happening in within a matter of about a six months or less. Q: We will actually see a strategic disinvestment take place in this financial year? A: Count on it. Q: How many candidates on your list for strategic divestment? A: This is an ongoing process so if I say its X number today tomorrow it will be probably 2X and after that it will be 3X. Q: Give me a ballpark, how many have you already identified? A: We have identified enough. The process itself is longer and more difficult. So, it is not an issue of how many we have identified but how many can the government really proceed with and push through. Q: The civil aviation minister was having a conversation with me and he said that tax payers cannot in perpetuity fund Air India. Do you believe that Air India as a candidate should be put up for strategic divestment? A: There are lot more much lower hanging fruits where we have to go first. The last strategic disinvestment that happened was in NDA 1 in about 2003, BALCO etc. So, it has been 12 years that not one has happened. So, it requires setting up the processes, so you have to first go with the lower hanging fruits. Then we will see where the process leads us. Q: You said that we should be prepared for more reforms. I know goods and services tax (GST) is going to be the big one but that will depend on what happens finally with the math in the Rajya Sabha and the government's ability to get the Congress party onboard to push the GST through in the next session of parliament. What really is left on the reform agenda that we could expect now because the sense one gets is that these mission mode sort of schemes and projects have now been announced and it is a question of execution but what more can we realistically expect on reforms? The sense we get now is that it is going to be execute execute execute, so what more is left on the reform agenda? A: Education sector lot of reforms still to be done there both at the primary education level and especially at the higher education level where we have seen no reforms. There is also the issue of medical education. The question what the government would like the private sector to do? I would really like to reverse it and ask what the private universities would like the government to do? That really is the crux of the matter. Q: Private universities I think want clarity in terms of policy, this whole business of the government intervening in terms of fee, what you can charge, what you can't charge for a private university, I think those are some of the issues that they are grappling with. A: Absolutely. Those are good points and government is very aware of it. Hopefully we will have some positive action on those fronts. Q: We should expect big ticket changes for education? A: Yes. Q: Should we also then expect big ticket changes in the textile sector not only because Smriti Irani has moved to the textile ministry but largely because it has been identified as a big employment generator by the government? A: No, both, because you got a dynamic minister there too and yes that is an area in which I have been pushing very hard, not just the textiles but labour intensive industries in general. So, we need the textiles, we need the footwear, we need the electronic industry, electrical products, all kinds of light manufacturing where you can generate employment. In the end the greatest weakness of the Indian economy in the last several decades has been that it has not generated good, well paid jobs and these are predominantly, not exclusively, but predominantly these are jobs in labour intensive manufacturing; that is where we need a big push. So, there are a number of things we need to do about which I have been talking inside the government all the way to the Prime Minister and there is general agreement on the kinds of things that need to be done. Let me not speak about these just yet but that is an area in which we certainly work. Q: Do you feel confident today that this ambition that we have had or the target we have had of achieving 25 percent of gross domestic product (GDP) for manufacturing, that is really going to be possible over the next few years? A: It is a longer term target but at present also the Niti Aayog has been assigned to do the 15 year vision for the country. I would like to thank that in 15 years we can get to some where there around 25 percent of the GDP in manufacturing. Particularly I hope a good bit in the labour intensive manufacturing also because in the end we need to create good jobs. Q: I know that the Niti Aayog has now broken away from that business of putting a five year plan together and assessing the five year plan because you believe that the need of the hour is much more dynamic policy making and now you are going to have a three year assessment, a five year assessment and a 15 year plan that you have put in place. A: Just a little different because we did drop the five year one, so, it is going to 15 year vision, seven year strategy and three year action plan.