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BW Businessworld

The Way Out

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HOW TO GET GROWTH BACK, THE FISCAL DEFICIT UNDER CONTROL, REDUCE SUBSIDY LEAKAGES AND...

SIX PERSPECTIVES FOR BRINGING THE ECONOMY BACK ON TRACK

Last year, after the Budget, chief economic advisor Kaushik Basu told BW, "We should all stop watching the Budget like a cricket match". Going by the lack of pre-Budget speculation in the media, it seems many have heeded his advice. Budgets need to be seen as a routine exercise, like a household budget which makes its owners aware of how much the gap between their earnings and spending is and how they should raise their resources while keeping an eye on their expenditures.

While expectations from Budgets can be tempered, problems in India cannot be ignored. This year, in the run up to the Budget, BW decided to do away with its usual pre-Budget round table discussion and instead rope in six experts to give their views on what needs to be done in specific areas of worry.

Ajit Ranade, chief economist at Aditya Birla group, says with the general elections looming, India ought to be prepared for another year of splurging before any restraint is shown. On the fiscal deficit, he thinks things may get worse before they begin to get any better. Ranade uses an interesting analogy — cholesterol in the body — to argue that a high fiscal deficit can be both good and bad and it is impossible to predict when you will have a "heart attack".

USIBC president Ron Somers is clearly disappointed with the 2G mess, which he feels has sent "wrong signals to investors". Neither is he delighted with the "flip-flop" on retail, which he feels has had a "chilling effect" on investment.

Ashok Gulati, the rather outspoken chairman of the CACP, argues that if the government continues with its "business as usual approach", problems like farmer suicides may not be a thing of the past. Gulati wants the Centre to stop passing the buck to the states, pointing to the fact that the previous revolutions in agriculture in India happened at the behest and prompting of the Centre, not the states.

In his unconventional chat with BW, Shubhashis Gangopadhyay comes out strongly in support of "untargeted" subsidisation. In his view, the argument that subsidies are bad and, therefore, should be cut is tantamount to throwing the baby out with the bathwater.

Roberto Zagha, the World Bank's country director for India, steers clear of any advice to the Indian government on what should or should not be done in the coming Budget. He firmly believes that infrastructure improvement and poverty reduction go hand-in-hand and that cities and urbanisation are a key to alleviating poverty in the country. This is no surprise.

S. Mahendra Dev thinks India is backing the wrong horse by focusing so much on schemes such as MGNREGA and other social programmes to push inclusive growth. There is, in his view, a lot more to inclusive growth than meets the eye.



Read the interviews and tell us which ones you agree with most.

(This story was published in Businessworld Issue Dated 12-03-2012)