One of India’s leading economists and Niti Aayog member Bibek Debroy today hit out at those who are blaming the NDA government on intolerance with the #awardwapsi campaign gaining momentum.
In an Exclusive interview with NewsMobile, Debroy has some sharp questions for those who recently protested against the government.
An economist, and an alumnus of the prestigious Presidency College and the Delhi School of Economics, Debroy feels the there are certain institutional changes the government has brought about, but are unfortunately not talked about much.
The government, he feels, is on a five-year agenda, and should be given more time. Debroy does not equate reforms with just GST and Land Bill, and warns against a hurriedly made GST bill. He questions the entire logic of ‘big bang’ reforms.
You have said that the recommendations of the 7th Pay Commission will increase the burden on the states. Please elaborate
This is really a pay commission which is meant for the Union government. Having said that, it is very difficult to prevent a spill-over of the recommendations, and its adoption by state governments, as well quasi-governments like colleges, universities, etc. The experience of the last two commissions shows that because of the spill-over, the state governments find it difficult to handle the fiscal burden.
Projecting on the basis of the past, state governments will find it difficult this time too.
Is Bihar merely a political failure, or is it likely to affect the govt’s drive on bringing reforms?
Whichever way the Bihar results would have gone, the reforms were somewhat insulated from that. The reform drive was independent of that. The only limited impact Bihar has is on the numbers of the Rajya Sabha.
Bihar’s result will not be interpreted as a mandate on reforms.
All that happened was there were several things that the government intended to do, but one could not do them because of the model code of conduct being in place.
Do you think incidents of intolerance cast a shadow on the favourable investment climate that you are seeking to build?
All kinds of people have come up with all kinds of protests under the banner of intolerance. My proposition is prove to me, not anecdotally, but by data, that intolerance has increased after May, 2014. You will not be able to prove it. Prove to me, that intolerance, however defined, did not exist before May, 2014. You will not be able to prove that either.
Therefore, if I am to take the protests seriously, demonstrate to me that you also protested during earlier instances of intolerance. If you cannot establish your credentials in that fashion, then I will believe that you are subjective, prejudiced, or biased, for whatever reason.
Do the ‘intolerance’ protests affect intolerance climate? No, I don’t think it does, because people who make investments are far more sensible, than people who tend to protest at the drop of a hat.
They are aware of what the country is, what it stands for, what its underlying strengths are and also what its weaknesses are.
Are polls in states withholding many big bang reforms? Many have complained that the reforms are rather incremental and not big bang.
Are these people arguing that they did not know that land bill has to go through a legislative process? If yes, then they have not read the Constitution.
On GST, the right question to ask is do we want a GST in a hurry, or do we want a good GST bill.
For example, who decides what the revenue neutral rate is? The GST Council does. It is their right. How can I announce in advance that the maximum GST rate is going to be 18%? If I were to succumb to pressures and say that the maximum GST rate is going to be 18%, it would be a bad GST. Are these people who talk not aware that a GST amendment requires a two-third majority?
Has the rising food prices hit the Modi govt’s perception, you know, generating the perception among middle class that the promised ‘Acche din’ are not coming anytime soon?
This question can only be answered by looking at hard data, and not by speaking to a select group of people. So, far the only data has come from a survey which was done by a magazine. So far as that is concerned, it does not show any remarkable dip in the support for the government.
It shows a decline, but that is expected, because no one is ever totally satisfied with what an incumbent government delivers. So, I see no evidence yet of sharp decline in public support.
It has been 18 months since the Modi govt took over. What are the positives on the economy front? Where could the govt have done more?
It depends on one’s expectations from the government. One tends to have a pre-determined notion of expectations from the government. In such situations, one is not judging the government on the basis of what the government said or promised, but in terms of such notions.
The Prime Minister never said that he is going to accomplish everything in one go, in 100 days, one year, or so. It has always been a 5-year agenda.
I am unaware of the PM equating reforms with the land legislation, or the GST bill. There is much more to reforms. So far as this government is concerned, to state the obvious, this is a government in Delhi. It is not a government in the states. Make in India does not happen in Delhi, it happens in the states. 95% of India’s national income is generated in the states.
This is a Union government which has to go through certain desirable features of democracy. It is understandable that legislations will take time, because they have to go through a Parliamentary process. As far as GDP numbers are concerned, irrespective of whether one uses the old formula or the new, there is no question that the GDP growth rate has improved. In terms of inflation, the numbers, barring one or two commodities, are also respectable.
More importantly, one finds all the signs of an increased public investment, without any sacrifice on fiscal consolidation. Initially, it was visible for roads, now it is visible for railways also.
Public investment is a necessary trigger for private ones to happen.
One of the other less-talked about institutional changes that this government has brought about is that that it has adopted the recommendations of the 14th Finance Commission in their entirety. In the past, there was an instance when the minority report of the Commission was adopted. This time also there was dissent when one of the members protested against the sharp increase of untied funds to states.
Not only has there been an increase in the untied funds to states, there has been a lot of emphasis on states in centrally sponsored states. They are longer being determined by the PMO by North Block or by Niti Ayog.
Instead, sub-groups of Chief Ministers have been formed—one on the centrally sponsored schemes, one on skill development, and one on Swachch Bharat mission. They have recommended the shape of the centrally sponsored schemes. This is a recognition that India needs to be much more decentralised.
Your thoughts on the how the NITI Ayog has done so far?
To state the obvious, Niti Ayog came into existence, six months after the new government came into place. Effectively we started from January 1, 2015. Most of us joined in earlier February. The second obvious statement is that Niti Ayog does not begin to function only because there is a vice chariman and two other members. It requires staff below that.
Initially we had about 1250 positions that we inherited form the old Planning Commission. We wanted to be leaner. The number of posts was slashed to about 600. Very few people in the old Planning Commission were on contract. The bulk of employees had to be repatriated. This was accomplished in August, 2015. We now need to recruit people, and we have issues advertisements. But the recruitment process takes time.
This is not a defense, but I am saying that those people are still not in place for Niti Ayog to be able to deliver.
Having said that, Niti Ayog’s role is different from that of the Commission, in the sense that it works actively with the states. This essentially means examining the public expenditure programs, to suggest ways to improve them, to look at its delivery, and to suggest new programs.
All of this was contingent on the recommendations of the three sub-groups of Chief Ministers, which were recently submitted. They don’t still become official, till they are adopted by the governing council of the Niti Ayog. In other words, because of the 14th Finance Commission, these sub-groups, 2014-15 has been an aberrant year.
Niti Ayog will not come into its own until the financial year 2016-17. Public expenditure schemes will then be in place. We will then have the support staff.
Are states doing enough for the smart city and urban development programme?
The concept for smart cities has been there since at least September-October, 2014. People don’t take the trouble to read it. That makes it very clear that a smart city can be of different types. It does not mean that the entire city is to become smart in an IT sense. IT also makes clear that what is smart about the city is not determined just by the state government, but also by citizens themselves. They need to determine what kind of smartness they want to impart in the city. Having said that, it is too soon to judge what the states intend to do about smart cities. The full details are not clear yet.
On whether they are doing enough, it is difficult to answer. It is almost a tautological statement, that by definition, the potential is always higher than the actuals. Also, the states are very heterogeneous. Obviously some states are doing better than others.
Do you think there is a bias in the way we judge Nehru today? You have written about this recently. Why is there this bias?
The bias comes from judging Nehru’s foreign policy and extrapolating it to everything. We unfairly judge his economic policy, and also confuse it the economic policy followed in the years after. After 1962, Nehru was not in very good physical shape either, and I ask people who criticise Nehru to show me one particular thing Nehru has done before ’62, which you really have problems with.