Four economists present "New Ideas for a New India" at a panel discussion

The fiscal deficit problem is not as visible in the States’ public finances as it is at the Centre, National Institute of Public Finance & Policy Director Rathin Roy said here on Saturday.

“With consistently improving quality of management of public finances despite their continued demonstrated ability to give handouts, the States have completed fiscal consolidation,” he said.

He was speaking at a panel discussion jointly organised by Sastra University and The Hindu on the state of the Indian Economy, ‘Economists on the Economaze.’

Four eminent economists presented New Ideas for a New India at the discussion. Other speakers were the former Chief Economic Advisor to the Union Finance Minister, Arvind Virmani, Aditya Birla Group Chief Economist Ajit Ranade, and corporate adviser S. Gurumurthy.

The Hindu Editor-In-Chief, N. Ravi, moderated the discussion. “Touch any area of the economy, and you find so much remains to be done in so little time. We look to our economist-speaker for guidance in navigating the economic maze,” he said.

The first panellist, Dr. Virmani, said the slowdown could not be fully explained by the global economic downturn. He also rejected the view it was a temporary phenomenon owing to the UPA government’s policy paralysis and governance deficit. “If a new government implements known solutions to well-known problems, Indian economy will not return to the 8-per cent growth.”

Sustained high growth decade after decade needed a package that comprised cuts in wasteful government expenditure, higher national savings, reduced dependence on short-term dollar inflows and a loose monetary policy, he said.

Dr. Ranade had a more optimistic take on the state of the economy. As a $1-trillion economy, India was growing at 9 per cent seven years ago. Now, as a $2-trillion economy, it needed to grow at 4.5 per cent to maintain the same rate of expansion, he said. The current rate of economic growth was, in fact, higher. India was estimated to grow at just under 5 per cent in the current fiscal. “Sometimes, one has got to keep perspective.”

Drawing on anecdotes, Mr. Gurumurthy challenged the application of Western economic theories to Indian problems. “There is a disconnect between institutions and economic agents…where is the study on diamond-cutting when nine of ten diamonds in the world are cut in Saurashtra?” he said.

In a lighter vein, he said that while Union Finance Minister P. Chidambaram “himself holds gold stocks as the community to which he belongs believes in gold, he is almost abusing it.” The “Wall Street-approach” saw the huge global asset of rising gold stock with Indian households as vulnerability. It was still to be determined if it was but indeed a weakness or strength of India, said Mr. Gurumurthy.