SPJIMR’s Centre for Financial Studies Conducts Webinar on ‘Third Generation Reforms for India’s Growth & Development’
Mumbai: The Centre for Financial Studies (CFS) of Bharatiya Vidya Bhavan’s SPJIMR, a top-ranked management institute in collaboration with Centre for Social and Economic Progress (CSEP) organized a webinar recently on “Third Generation Reforms for India’s Growth & Development”. Former RBI Deputy Governor and Former ED at IMF for India, Dr. Rakesh Mohan was the speaker of the session which was moderated by Prof. Ananth Narayan, Associate Professor-Finance, SPJIMR.
The discussion began with Dr. Mohan throwing light on first, second and third-generation reforms. According to him, the main organizing principles of most reforms carried out since 1990s had really been the objective of freeing the private sector from the myriad government controls, consequence of which entrepreneurial spirit has been unlocked and India has been transformed. Dr. Mohan believes, just as second-generation reforms empowered the private sector, the third-generation reforms need to empower the public sector across all levels (Local, State, National) in a similar fashion, to deliver public goods and services efficiently for the benefit of all segments.
Next, commenting on the need for change now, Dr. Mohan pointed towards the problem of employment, the lack of enough job creation and low per capita income as compared to other ASEAN countries. Dr. Mohan also underlined the three common characteristics of successful Asian countries. First, they placed importance on overarching focus on economic growth articulated consistently at the highest policy levels which are supported by adequate institutional arrangements to carry them out. Second, they are focused on employment and export-oriented manufacturing. Third, they have focused on health, sanitation, and education on a universal basis.
Prof. Narayan took forward the discussion by asking Dr. Mohan the reason for India not being able to effectively deliver the above stated objectives. Dr. Mohan attributed it to the lack of focus on economic growth, health, and education by the government. He also expressed his view, based on decreasing trends of Tax-to-GDP ratio, that the government is not interested in collection of taxes and consequently leaving it with lower funds to focus on public services which required approximately 3% of GDP to be spent. Dr. Mohan was also of the opinion that if necessary, this spending could be done through deficit. One other feasible option would be to print money and utilize it in a phased and co-ordinated manner. All in all, he believed the focus needs to be on public expenditure towards productive activities which bring in more private sector investments.
Moving on to the administration context, when asked about the administration and bureaucracy being the barrier in achieving success with respect to growth and public services, Dr. Mohan replied that the current structure of administration continues to have colonial structure which was designed to focus on control and not development. Dr. Mohan feels that there needs to be more public presence to deliver public services. This being a difficult issue, needs to be addressed by making public service prestigious again relative to private sector, increase lateral entry and building domain expertise at all levels.
Lastly, commenting on solving the problem of lower public employment being a result of vacancies in government jobs and public sector and changing the administration structure from colonial to decentralised structure, Dr. Mohan opined that it can be done through ideation and sheer commitment from the top-level authorities.
Dr. Mohan concluded by suggesting that economic growth should be the number one priority as it forms the basis for welfare activities. We must have a centralized system through technocratic strengthening of NITI Aayog, focus on having a clear articulation of this vision, the strategy, co-ordination, and communication. There must be consensual activities between different parts within the central government, central-state governments, and state-local governments. There needs to be a clear commitment to providing 100% of resources to everyone for primary and secondary health and education and a focus on increasing non-agricultural employment.