With apprehensions over global market heading for a possible recession and which may affect the Indian economy, Sanjeev Sanyal, member, economic advisory council to the Prime Minister (EAC-PM), today assured that India may not remain totally unaffected but it has space to absorb the shocks generated in the global market.
Mr Sanyal was addressing a seminar in Kolkata, organized by the Bharat Chamber of Commerce, on what should be the reform agenda for the next 25 years. He remarked that there is a lot of uncertainty in future and no deterministic planning can help. But, the economist said that supply has eventually improved after the pandemic and highlighted that India’s banking system is in a much better position. Had it been 2015, the banking system may have collapsed, he observed.
He said that GST and tax reforms generated benefits and the macroeconomic system in the country is doing well. He clarified that in case of shocks in the global market, India will feel an impact but “we have space to absorb a shock since the internal market is in a good position”.
Commenting on the depreciation of the Indian currency, he said if the RBI wants then it can burn the foreign exchange reserves to stabilise the currency and the mismatches in the currency flow, adding that “management of rupee is based on the concept of ‘management float’. We have been doing that for the last 30 years and that will continue.”
On the reform agendas, he said judicial and administrative reforms are necessary. “Complicated laws need to stop. We need to get the legal system functioning again. Contracts need to be enforced on time. There are about 4 lakh cases stuck in the judicial system.”
“We also need administrative reforms.” Citing an example, he highlighted that there are about 840 autonomous bodies of the central government which needs auditing just to find out what they do. “These are like outdated parts of the government e.g. the now-shut All India Handicraft Board, or the Tariff Commission.” He remarked that the administration requires reorientation.”
Lastly, he said that infrastructure needs to be focused, especially on urban infrastructure. He said a high-powered committee has now been formed for urban infrastructure planning where he is a member and also felt that India’s foreign service need to expand.