Arvind Panagariya, vice-chairperson of NITI Aayog that replaced the Planning Commission this January, blames opposition parties for creating hurdles to economic reforms. In an interview to Hindustan Times, he describes the 2013 land law enacted by the UPA as anti-poor and seeks lower interest rates, modern bankruptcy law and faster infrastructure development for better economic growth.
HT: Why do you think the UPA-era land acquisition law was anti-people and business?
AP: My reservation is with the law’s anti-poor aspect. We have a 470-million workforce with 12 million expected to be added each year in the forthcoming decade. About half of this workforce is in agriculture, which accounts for just 15% of the national income. The larger share in employment rather than in income means that numerous landless workers and marginal farmers live a subsistence existence. Of the remaining half of the workforce, employed in industry and services, nearly 90% is in informal, unorganised sectors.
So, we need to create well-paid jobs for the bulk of our workforce. This requires inter alia land for rural roads, cities, affordable housing, industrial corridors, schools, hospitals, factories and offices. In its current form, the 2013 land acquisition act makes the task of securing land for these items extremely difficult and, thus, constitutes a hurdle to the creation of good jobs. And that hurts the poor.
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HT: What economic and labour reforms are necessary for India to be on high growth pedestal?
AP: Currently, our growth rate is more than 7%. We also grew at the average rate of 8.3% for nine years from 2003-04 to 2011-12. So, many policies necessary for rapid growth are in place. This being said, sustained rapid growth for another two to three decades would require us to restructure and revitalise our banks, bring down interest rates, make our labour laws more employment friendly, introduce a modern bankruptcy law, implement the GST (goods and services tax), simplify direct taxes, end tax uncertainty, impart skills to workers and, above all, speed up building infrastructure, including roads, railways, airports, waterways, industrial corridors, smart cities, power and telecommunication.
HT: How do you think the economy is doing and by when do you expect India to grow at 10%?
AP: We are clearly out of the trough of 2012-13 and 2013-14. We have a responsive government and it has taken numerous steps to accelerate growth. It will continue to do so in the forthcoming months, as the recent actions to restore the health of our banks testify. So I remain optimistic that we would touch or come close to the double-digit mark by the end of 2018-19, perhaps sooner.
HT: On the economic front, which are the big hurdles the government is facing and how do you think they can be overcome?
AP: Unwillingness of some opposition parties to allow such measures as the GST and the introduction of greater flexibility in land acquisition in Parliament is the most important hurdle. In some cases, the only solution is continued negotiation with the opposition parties while in others, mainly matters falling under the concurrent list, forward-looking states may take a lead in bringing changes in accordance with their needs.