The International Management Institute, New Delhi recently concluded its Economics Summit as part of its annual management Conclave, Conventus 2016. In the light of the theme, “Strengthening India’s Sectoral Ecosystem: Working towards Sustainability“, experts discussed various sectorial reforms to spur economic recovery in India and emphasised the need for a sustainable economic growth to positively renovate the economy.
The panel, moderated by Dr. Rajeev Anantaram, Professor of Economics at IMI, New Delhi, included Dr. Arbind Prasad, ex-Director General at FICCI, Dr. Vivek Suneja, Professor of Strategy and International Business at Faculty of Management Studies, New Delhi, Dr. Simrit Kaur, Professor of Public Policy at the Faculty of Management Studies and Mr. Prabhudatta Mishra, a special correspondent with Financial Chronicle.
The discussion was initiated by Dr. Anantaram, who reminded us that India was celebrating 25 years of reforms this year. “Despite this, the question arises, have institutional reforms gone deep enough and contributed towards sustainable growth?” he exclaimed to set the theme for the day.
“We still have obstacles like the Permission Raj. How good is the growth if people in India cannot be assured of sustained income and better quality of life?” Dr. Anantaram said in his opening remarks.
He further stressed on the need for sustainable growth and said, “The US and China have followed the conventional paradigm i.e. focussing on growth and then, taking care of the problems in between. This is ecologically taxing. India is a very different place. It introduces issues of sustainability and solves its problems on the outset.”
The discussion was carried forward by the first panel member, Mr. Prabhudatta Mishra, who focused on reforms in the agriculture sector. He highlighted the Indian government’s aim to double the farmer’s income in 6 years through Prime Minister Narendra Modi’s 7-point strategy. The emphasis was then put on the agriculture credit, of around Rs. 9 lakh crores, extended by the government and the importance of proper channelization of the same so as to boost the rural economy.
“If the Government is able to channelize this amount in a proper way, agriculture can be taken to the next level,” Dr. Mishra added.
Further, Dr. Simrit Kaur entered the discussion by giving a brief introduction about the conventional economic reforms motivated by the Russian economic model. She explained how Foreign Direct Investments under the Make in India initiative are helping to fill the investment gap that India has faced in the past.
Also participating in the discussion, Dr. Arbind Prasad echoed the importance of skill development and reforms in the banking sector. “Challenging NPA figures impact the whole economy” he said. Dr Prasad further said that the number of universities in India has increased to over 750, however, the quality of education is still a “serious cause of concern”.
“There are some key questions that need to be asked in view of the Indian Economy,” remarked Dr. Vivek Suneja. “Can we sustain a population shift from rural to urban areas? Can we decentralise economic activity? Can we create non-farm jobs in the agriculture sector?” Dr. Suneja stressed that the Indian services sector has reached a saturation point and growth will be restricted till an economic transition is introduced.
Another problem that was highlighted by Mr. Mishra pertained to the dismal GDP contribution of agriculture despite the increasing credit support extended by the government, over the years, in this sector.
Mr. Mishra elaborated by explaining the dire consequences that surplus production, in any crop, has on the price levels. “To maintain sustainable price levels, either in case of overproduction or underproduction, is of grave importance. The government hasn’t addressed this problem in a serious manner,” he said.
Further into the discussion, Dr. Suneja also stated that India is a very different country. “The models of the West might not always work when applied to the Indian sectors. Hence there is a need for creativity in the sector. The focus therefore needs to be on rural education and human resource development. Initiatives in this direction will result in overall growth of the Indian services sector,” he detailed.
“Look at the opportunities rural India provides!” Dr. Prasad exclaimed, adding that there is a need to introduce vocational training courses and align them with higher education so that students do not hesitate in enrolling for them. “The mechanism for certifications needs to be tackled,” he added.
Dr. Kaur lent some helpful insights to tackle such issues. Hinting at reforms in the manufacturing sector, she said that in order to achieve sustainable growth in the manufacturing sector, ease in regulations and a conducive institutional setup is the need of the hour. “As manufacturing is mostly driven by the public sector, the absence of factors like profit maximization, competition, effective shareholder monitoring, fear of bankruptcy, etc. adversely affects the growth of this sector,” she added.
As the audience engaged in some intriguing Q&A discussion with the panel, Dr. Anantaram attributed the slow growth in the sector to the limits of specialisation. “India has moved from the agriculture sector to the services sector, which in my view is illusionary leapfrogging,” he added.
The Economics Summit ended on a note that India is a bright spot, among all other countries in the world. Further, sectorial reforms must be tailored to the Indian context and aim at sustained innovation to augment the economic stance of the country. Further, if the focus shifts from self-interest to social cohesion, India can go a long way and achieve a double digit growth like any other growth model around the world.
Dr. Anantaram aptly concluded the session on the remark “We must move away from a top-down approach and work towards a bottoms-up methodology.”
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