Govt needs to share project risk with private sector: Rajiv Kumar

The agenda for the new government must be to accelerate growth whereby we can sustain a near-double-digit growth for the next three decades. A very strong foundation has been laid in the last five years. Foundation in the sense that you formalise the economy, you improve the governance and you improve the delivery of public services to the bottom of the pyramid. Now the fear that growth will increase inequality is not there. There is a government now, which is the nature of a development state, rather than, soft state or crony state. It has shown that it can bite the bullet on major reforms such as GST, demonetisation or the Insolvency and Bankruptcy Code,. This continuity now means that the private investor can be sure that there is a government, which is going to be committed to growth and development of the economy. The last inning was to bring the economy out of deep trouble and consolidate it. You have never seen any other five-year period with an average 7 per cent growth, with only 3 per cent inflation, and the current account deficit well under control. There is a very stable macroeconomic situation.

With all these, I think, one can now go for rapid growth. Decisions which facilitate and promote private investment must be taken. The Government cannot do everything alone. You need to revive PPP in a major way. We need to share the risks with the private sector. For example, reduce the risk associated with acquisition of land for the private sector, and bring the Government into the venture as an equity holder. China has done it in a very successful way. We need a way of working where the government and the private sector can talk to each other on the basis of trust.

I've not looked at the Vietnam model, and the package that they are offering as incentive. I think that given the size of our economy, we may not need to do all that. But there is a big attraction to the investor. Also, Vietnam is attracting what is called export-oriented investment. To push exports, one needs to offer that sort of a package. From red tape to red carpetis what is needed. Not just companies shifting from China, but you need to have export-oriented foreign investment which will help raise the volume of exports. They bring with it technology, market connections and market knowledge. We could create clusters. Neemrana was created in the past, but no new one has come about. We can do the same for the Chinese too because we want the Chinese investor to invest here. We can maybe even set up a challenge method, whereby we invite the States, and somebody in the Central government can take charge.

I think GST revenue collection has seen good growth during March and April and it will remain buoyant and will improve. The tax shortfall will be a story of the past because as the GST net expands and its compliance improves, we will get more revenue. Also, in direct tax, I think, given the greater formalisation of the economy, with 6.8 crore taxpayers rather than 3.5 crore, there will be buoyancy. I think tax revenues, are going to go up and the shortfall will be made up to that extent. It is important to start concentrating on what is often called in the Western or advanced economies as the public sector borrowing requirement. We must look at Central, States, off-Budget and PSU borrowings. We can surely reduce some of the off-Budget borrowings that is done to finance non-productive expenditure. The second part is that you will have to find more fiscal space, because the government needs to increase its capital expenditure, and that fiscal space will come from divestment. NITI Aayog has recommended a list of about 40 PSUs to be divested and they have been approved by the Cabinet. Now, we need action on that.

Yes, Air India should happen. I think we have learned many lessons. A new package is being prepared, and you will see that soon.

This narrative on farm distress is a bit misplaced. Because if it was so in, you wouldn’t have had the election results we have. There is twin mis-narrative about unemployment and farm distress. I think these should be put to rest. I think the issue is about modernising agriculture. Production of cereal, rice and wheat has been rising faster than the rate of consumption. Now we have surpluses. The surpluses can’t be exported because the cost of production is very high. Agriculture needs to diversify. You need the farmer to have multiple sources of income. One has to emphasise much more on agro processing and increase investments. Only 10 per cent of our food is processed and the capital investment in agro processing has been going up by less than 1 per cent per annum. This needs to be ramped up.

We need to free the farmer of the APMC and replace it by APLM. The model tenancy law has to be put in place so that the farmers can release their land for farmer producer organisation for any collective endeavour, without the fear that they will lose their land. The model law is ready, but the States have to implement it. Another step is reducing the cost of production. Here, I have been a proponent of zero budget natural firming, and I have written extensively about it. This will make agriculture less costly, globally competitive, improve the carbon content of the soil and reduce the carbon in the atmosphere. It will make our agriculture more drought-resistant. So these are the new ways of thinking for agriculture, rather than continuing to talk about the same old model.

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