India needs to focus on privatisation of banks and public sector enterprises, as one of the reforms to push the economy towards higher growth, said Arvind Panagariya, chairman, sixteenth finance commission at a FICCI event on August 7.
“Main reform needed is the privatisation of banks,” Panagariya noted, highlighting the history of non performing assets in the country, which led to bank capitalisation.
We have gone through two cycles of NPA clean up, he noted, pointing out that the government needs to get out of this cycle.
On the issue of economic activity, Panagariya pointed out that it stays heavily in the public sector, where capital is not being used.
Panagariya also went on to highlight that India was not using its most abundant resource the labour judiciously.
“India's abundant factor was labour, but we focused on heavy industries and machinery. We don't use our labour effectively at all,” he pointed out calling for factor market reforms.
Land reforms are the most difficult to implement, he noted.
Panagariya was at the book launch of IMF executive director KV Subramanian’s book India@100.
The book focuses on what it would take to become $52 trillion economy by 2047.
Subramanian, who is a former chief economic advisor of India, noted that India needs to grow at 8 percent per annum and 12-12.5 percent in nominal terms to become a $52 trillion economy.
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