Economy

Need to initiate third generation economic reforms to elevate growth to 8-9 per cent levels, says PMEAC Member Rakesh Mohan

Our Bureau New Delhi | Updated on November 18, 2021

Reforms on judicial side and overall government capacity to deliver public goods can each add 1-1.5 percentage points to GDP, says CEA Subramanian

Reforms in the judicial side and in the overall government capacity to deliver public goods can each add 1-1.5 percentage points to the country’s GDP growth, the Chief Economic Advisor to the Finance Ministry Krishnamurthy Subramanian said on Thursday.

These reforms should be considered as part of the third generation reforms that must be focused upon, he said at a panel discussion on “Going for Growth: The Reforms Agenda” at the Confederation of Indian Industry (CII) Global Economic Policy Summit 2021.

These remarks came after Prime Minister’s Economic PMEAC Member and former RBI Deputy Governor Rakesh Mohan said in the same panel discussion that time is ripe for India to initiate third generation of economic reforms to elevate its growth trajectory to 8-9 per cent per annum, which is needed for doubling of per capita income in the next couple of decades.

Efficient public services

The third generation reforms needs a special resolve in delivering efficient public services particularly focused on long neglected social needs such as nutrition,health services, primary and secondary schooling, major quality upgrade of tertiary education, water supply, sanitation and urban development, Mohan said. Any successful country has delivered these public services, he added.

Mohan made it clear that he was not advocating the return of public sector or reduction of private goods and services. He was focusing on delivery of public services and need to strengthen government in performing its key functions.

Subramanian said that as part of the second generation of reforms, emphasis was on enabling or removing structural problems that had kept Indian firms from being competitive and led to pushing for protectionism. The policies have been enabler for growth through jobs in the organised sector, he said.

“When the 1991 reforms were happening, I was in college. People like Rakesh Mohan who were involved must have seen the benefits of those reforms.. But the general public did not then see the benefits. I have no hesitation in saying that while many others may not see the seminal benefits of the factor market reforms that are being undertaken by us now, those like me who are involved in these reforms genuinely believe that these will bring benefits like those in the 1991 reforms,” Subramanian added.

Published on November 18, 2021

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