Finance Ministry’s Chief Economic Advisor (CEA) Kaushik Basu on Monday maintained that the Indian economy can notch up a 10 per cent growth rate in the next few years if the sluggish bureaucratic decision-making is speeded up, the systemic inefficiencies in government removed and the leakage and pilferage in anti-poverty programmes effectively plugged.
In his keynote plenary address at the ‘Bharat Ram Memorial Seminar’ on ‘Global economic crisis: Back to Keynes?’ organised jointly by the Shri Ram Centre (SRC) and the Federation of Indian Chambers of Commerce and Industry (FICCI) here, Dr. Basu said: “We need to attack the system of delivery in our anti-poverty programmes that is riddled with leakages and pilferages and the structure of government functioning needs to be reformed to bring down transaction costs. These along with the high savings and investment rate of 38 per cent will be sufficient to enable India to reach the 10-per cent growth rate mark within a few years.”
Dr. Basu said that while the stimulus packages have helped in economic recovery in recent months, it must be understood that certain government schemes like the NREGS and the farm loan waiver along with placing more money in the hands of the people through the Pay Commission recommendations have enabled the country to withstand the global economic crisis in a much stronger way than the developed western economies.
The high savings and investment rate, he said, had put India on a good wicket and this could rise to 40 per cent. And given the youthful population’s propensity to save and invest, such a high rate of savings and investment would trigger a sustained growth of the economy, he said.
Earlier, speaking at the inaugural session, Emeritus Professor (University of Warwick) Robert Skidelsky said that in marked contrast to what happened during the Great Depression in the 1930s, ‘Keynesianism’ enjoyed a remarkable second coming in the immediate aftermath of the global financial crash, which saw governments the world over instituting stimulus policies to stop the slide into depression. This, he said, testified the enduring power of Keynes’ commonsense.
Celebrated author of the three-volume biography of John Maynard Keynes titled ‘Keynes — The Return of the Master’, Lord Skidelsky said: “Although the financial crash has been an iconic example of the importance of ‘uncertainty’ in economic life, of the volatility of financial markets, of the speed of output and the sluggishness of wage and price adjustments, Keynesian model has not yet been rehabilitated. There is no doubt that the present global capitalist set-up has been much more favourable for capital than for labour.” Pointing out that the liberal solution of breaking up concentrations of big business is probably unavailable in the increasingly integrated global market, he said: “The key to any restoration of a Keynesian political economy is thus the rehabilitation of the State as an instrument of public interest.”
Lord Skidelsky said that it could be argued that national states cannot control global capital and that a world state is unavailable. “But a ‘single world’ model of globalisation is not the only one. It is far more plausible to think of global integration developing via regional integration. This offers a more feasible route to reinserting democratic oversight of the economy,” he said.
