India’s entry into the big league of nations makes it imperative for it to have a disciplined fiscal policy and a responsible and credible central bank, Lord Meghnad Desai, noted economist and UK peer, said. Commending the focus of the present RBI Governor as well as his predecessor on controlling inflation, he also had a good word for the government sticking to its fiscal deficit targets, and said this was good for the country.

He called for more bold and liberal market reforms, including consolidation of public sector banks and their divestment, from the Narendra Modi government. He said the focus so far had been on improving efficiency but not on major changes. Double-digit growth, he said, would happen only when changes are undertaken, including labour market reforms and removal or rationalisation of archaic factory laws.

He expressed confidence that the economy would expand by 8.5 per cent next year on the back of better growth of small and medium enterprises. When asked about the problems in various infrastructure sectors, he said that large firms had got bogged down but there was too much focus on the old economy. He drew attention to the growing new economy firms, which were generating impressive volumes.

Asked about China, Lord Desai was confident that it would manage the transition to a soft lending comfortably. He said that a new generation needed to be empowered there, but history was in their favour as one of the longest surviving nation-states.

Lord Desai was in Mumbai to conduct two modules at his eponymous Meghnad Desai Academy of Economics. The first batch of 21 students is graduating shortly. The one-year diploma course that has three main streams in finance, public policy and data analytics, has been designed with a view to equipping candidates for the job market and will be expanded gradually, he said.

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