‘We should pay more attention to China’
‘Our competitiveness with China is very important.’
‘If the exchange rate depreciates, it is good for us because it helps in our competitiveness.’
“From a medium term perspective, there is a lot of turmoil in the world and turmoil can create opportunities, but also certain risks. So I really think that as an incoming VC of the NITI Aayog, an important job of mine is to think as to what constitutes a medium-term roadmap for revival of growth,” NITI Aayog Vice-Chairman Suman Bery tells Business Standard‘s Indivjal Dhasmana and Sanjeeb Mukherjee in his first interview.
You have taken over as NITI Aayog vice-chairman at a time when various agencies have cut economic growth projections for India and raised the outlook on inflation. How do you see NITI’s role in controlling inflation and boosting growth?
From a medium term perspective, there is a lot of turmoil in the world and turmoil can create opportunities, but also certain risks. So I really think that as an incoming VC of the NITI Aayog, an important job of mine is to think as to what constitutes a medium-term roadmap for revival of growth.
Politicians across the world and not just in India are sensing that future growth will be different from the past.
One reason why I think I have been selected for this job is to think clearly of a medium-term framework and how that framework will be different from the past.
Are you looking at reverting to a five-year plan in a different form and format?
I would say that it would somewhat be closer to what I experienced as chief economist in Shell. Shell in the 1970s started something like scenario planning.
I am not saying that NITI will do scenario planning. But, we want to equip the prime minister and his council of ministers with techniques for dealing with an uncertain world.
Nowadays, cooperative federalism is marred by states complaining about discriminatory treatment in resource allocation and repeated tussles between Centre and states on variety of issues. How do you think these can be addressed by NITI?
Well, any federal structure has tensions between the Centre and states, be it the US or Australia. But, if you are saying that tensions are so huge that states don’t want to learn from each other, I will say no.
I would like NITI to understand states’ problems, process them and use our conversational power in Delhi to trouble-shoot them.
NITI should be seen as an honest broker between the Centre and states.
At a time when RBI is focussed on fighting inflation, do you think there is a policy trade off in tackling inflation and growth as the IMF has talked about?
I agree with the governor’s statement that nipping inflation in the bud is a better guarantee of sustainable medium term growth than having extra-ordinary actions that some central banks abroad are having to do.
My short answer to your question is there is short-term pain for long term gain.
There is no rule book on the best response to a shock from the supply side because you are crunching demand. But inflation is inflation. In a country like India, food inflation particularly is iniquitous.
Easy money around the world has led to asset price boom. So we are ending up the world over with rather unequal recovery.
It is a political decision, execution is technocratic.
There are expectations that there would be more Fed rate hikes. Do you fear huge volatility in capital flow to countries like India due to this?
As it is, FIIs are pulling out money. So, they have anticipated this.
We in any case have been wanting to be succeeding in substituting FDI for FPI. The number that I would focus on is what is happening to FDI.
You are worried about taper tantrum, I suppose and risks are there. But the Fed is managing signalling so that these do not come as a surprise.
If the money leaves gradually and the exchange rate depreciates, it is good for us because it helps in our competitiveness.
Frankly, we should be paying much more attention to what is happening to China because our competitiveness with China is also very important.
NITI has abandoned the official poverty line that the erstwhile Planning Commission used to bring about. Recently, one paper came out from the IMF and the World Bank each. They differ drastically on abject poverty in India. Do you think it is the right time for NITI to come out with the official poverty line?
It is not for NITI to establish a poverty line in the absence of a household consumption survey. It has not been easy to do face to face surveys in these times.
At some time, NSS (National Sample Survey) will again conduct this survey. If the government decides that the poverty line is an important method for their purposes, NITI will do what it would be asked to do.
In the meantime, we have engaged with Oxford University on a multidimensional poverty index.
I have been monitoring this debate over the IMF and the World Bank papers.
I think there are issues with recall rate. But the real point is as and if the government determines that the base exists for the consumption based poverty line, how should that poverty line place India’s status as middle income country.
That is the discussion we need to have.
Changing world dynamics, particularly the Russia-Ukraine war, has put a question mark over the Budget numbers for 2022-2023. Will NITI be suggesting new numbers to the government?
Those numbers come from the finance ministry, our job is to provide a medium-term growth outlook and to locate India’s transformation in that medium-term growth.
Over the last two years, we have been forced to improvise because of two reasons — COVID-19 and the war — we now need to take stock and to see that in the changed world what does that imply for our developmental model and for integrating states in that development model.
What is a broad horizon or timeframe you are looking at to come out with this document?
I think the last such document from NITI came out in 2018.
It will be too early to fix a firm timeline, but I feel that this is a service that NITI needs to provide to equip India for the next year’s G-20 presidency and about restoring growth in a changed global environment.
NITI has an important mandate of cooperative federalism. Over the years it seems to have been diluted a bit. Your view?
That’s your perception, but I certainly have been commissioned to enlist my full force behind cooperative federalism.
How do you plan to make states play a role in major decision making process on national issues?
We will do it through the strength of our ideas. If NITI has something to say, it has the ears of the chief ministers.
That attention is because any progressive chief minister knows that elections are won on economic development.
The vision is that our quality of analysis will be so good that states are compelled to take us seriously.
Feature Presentation: Ashish Narsale/Rediff.com
Source: Read Full Article
