Noted economist Rajiv Kumar is currently Vice-Chairman of the NITI Aayog. Dr Kumar holds a DPhil in economics from Oxford and a PhD from Lucknow University, has served as director and chief executive of the Indian Council for Research on International Economic Relations (ICRIER) and worked with the Asian Development Bank.
He was also a senior fellow at the Centre for Policy Research. Kumar has also had stints in the Central government. He worked in the Ministry of Industries from 1989 to 1991 and then served as an economic advisor in the Ministry of Finance’s Department of Economic Affairs from 1992 to 1995.
In an interview to PRASHANT MUKHERJEE, Kumar said the Centre and states should cut taxes on fuel. He also emphasised the need to focus on reducing the number of public sector banks and advocated that no agricultural income should be taxed. Excerpts:
Q: How different will the development agenda for New India 2022 which NITI Aayog is planning to release be from earlier plans?
A: We are trying to call it the strategy for ‘New [email protected]’. I am saying this in order to distinguish completely from either an agenda or a plan, because agendas and plans normally have a lot of wish lists and hence we wanted to make it different. We have consulted all the ministries and incorporated their inputs.
Based on our long deliberations we intend to come up with a set of implementable and practical recommendations that can be taken up immediately to help to achieve the goals which are explicitly specified. For example, in one chapter we say we want exports to be doubled by 2023.
Then how we can achieve this will be recommended after identifying the principal constraints. And all of this we are doing for each chapter in a small booklet of less than 1,500 words. So, it’s a very succinct summary. And it makes no attempt at making investment allocations. We want to shift from Central to indicative planning.
Q: There is a renewed concern on what happens to the country’s macro economics as oil prices remain elevated. Should the government cut taxes to bring down oil prices?
A: Since there has been more revenue collection from direct taxes and GST which provides the government more fiscal headroom than in the past, there is going to be fiscal revenue buoyancy going forward because of all the steps the government has taken. This buoyancy in revenue gives space to cut excise duties on fuel.
This will take care of the inflation problem and safeguard the purchasing power of the middle class. Hence, I am suggesting that this is the time to cut excise duties in fuel ~ not by the Central government alone but simultaneously also by state governments. We don’t want higher oil prices to result in entrenched higher inflationary expectations and on the other hand, it is also undesirable to let your fiscal balance deteriorate.
Q: What is your assessment on stalled projects? Is the government tactfully reducing the outstanding number from the system?
A: You are criticising the CMIE data. If you look at the real data, stalled projects include projects like the river Brahmaputra-Siang project, a Rs 60,000 crore project, that is never ever going to take off since the people staying there are opposing it.
Hence, including it in the category of stalled projects will never reduce the numbers. Moreover, the Prime Minister himself reviews most of the stalled projects above Rs 500 crore every month and has removed the bottlenecks of so many projects. I have tried to speak with Mahesh Vyas, CEO of CMIE, so that they get the right list of stalled projects. They are not ready to accept it.
Q: The banking system at present is clearly under severe pressure due to high non-performing assets (NPAs). In the past four years there have been three concrete reforms ~ Indradhanush, recapitalisation and then Insolvency and Bankruptcy Code ~ but still we have not seen them out of the woods. What are your views?
A: NITI Aayog does not work much on the financial sector as we work more on the real economy and hence it won’t be useful for me to make any comment. But my view is that more reforms are required in the banking sector and the government should now focus on reducing the number of public sector banks.
One of the real issues with public sector banks, especially smaller ones, I think, is that they suffer from a huge human resource problem, and concerted policy action is required to solve this.
Q: The government recently passed the fugitive bill. Do you think this will bring willful defaulters and fraudsters back to the country?
A: This is the first step. Most governments have told us, including the Swiss government and the UK government, that we don’t have a law under which we can demand their deportation. This is the necessary condition for that. This is why the legal structure has been created.
Hence, this clears the way for us making an official request to send them back. My view is our own due diligence and working of our commercial banks should be to ensure that such cases should not happen in the first place.
Q: There has been some thinking in NITI Aayog to bring income from agriculture under tax. What is the present stance on this?
A: This has been discussed since 1991, when I joined the government. The time for it has not come because agriculture is in a very backward state. Majority of the farmers are in distress. There are a handful of people who are taking undue advantage of this, but there are other ways to tackle them.
Q: One of the biggest Budget announcements made in the healthcare sector was to provide cover for 10 crore families. At what stage is the plan?
A: The name of the scheme is Ayushman Bharat. NITI Aayog was deeply involved in designing it. Now, they have created this National Health Agency.
The CEO, Indu Bhushan, has been appointed. he has come from Asian Development Bank to take up this position. The scheme is on track and it will be rolled out this fiscal. There is a lot of work to been done.
Q: What about the funds?
A: We have the funds. We have worked out that the average premium will be around Rs 1,100. This amount can be covered with a cess which the Finance Minister announced.
There are eight states which have their own schemes, which cover another seven crore households. After that we will take the next step towards universal health coverage.