Renowned economist Arvind Subramanian, on Tuesday, said that he was extremely hopeful of India’s economy and asserted that Prime Minister Narendra Modi could well become the Deng Xiaoping of India. “My Deng Xiaoping analogy is based on three or four reasons. Firstly, Modi represents a decisive break from dynasty rule like Deng Xiaoping broke with the madness of Mao Zedong ideology. Other two things that make me to think further on this are Modi’s decisiveness, pragmatic approach and the obsession to get things done like the Chinese reformist leader. Also, what strikes me as a parallel between the two is the kind of long-term horizon for their countries. Of course, the other parallel is that both of them have baggage. However, I hope the new government will resist the temptation to do cheap things for short-term gains and drive the bureaucracy for efficient delivery for long-term growth,” said Mr. Subramanian, who is the Dennis Weather Stone Senior Fellow at the Peterson Institute for International Economics and senior fellow at the Center for Global Development, while addressing the Rotary Club of Madras.
Highlighting some of the key areas that need attention, he urged the new government to focus on inflation control while attempting to attract investments. “Containment of inflation should be an important focus area for the new government along with the agenda of attracting investments by clearing and accelerating projects. At 10 per cent inflation, there is no trade-off between inflation and growth. Over these months, the double-digit inflation has taken a toll on the economy,” he added.
He also asserted the government should press pause button in the case of raising MSP (minimum support price) price for wheat and rice as part of inflation-control measures. “Rate of increase for MSP should slow down considerably as it has been a big cause for high inflation. People expect food prices to come down due to high production, it is not happening. We have so much foodgrains because we raised MSP,” he added.
“Doing away with diesel subsidy and roll out of GST may also be considered in the immediate-term to fill in the deficit,” he said adding “unless fiscal deficit and inflation is brought down, interest rate should not come down.’’
Earlier, he also spoke about the deterioration in Indo-US relationship. The economist wanted the new government to draw bigger strategies like civil nuclear agreement to boost relationship with the U.S. as it was a huge and favourable market for Indians and people of Indian origin, who made about $50 billion money every year by some way or the other. “Also, if India grows at 8-10 per cent and integrates it well with other economies, it will help improve the relationship the U.S,” he added.