Use De­ci­sive Man­date to Build Our Sav­ings Rate

Make growth, in­fla­tion and sav­ings rate the holy trin­ity

The Economic Times - - Pure Politics - RISHAD PREMJI

I want to start by con­grat­u­lat­ing the new BJP-led govern­ment. The people have un­equiv­o­cally spo­ken, which gives our new govern­ment the chance to pur­pose­fully drive their promised agenda. In this con­text, I am shar­ing some sug­ges­tions on the agenda in two ar­eas––the first on the econ­omy and the sec­ond, very brief ly, on ed­u­ca­tion. Growth and in­fla­tion have been the two most im­por­tant num­bers that we all watch for. I think that this govern­ment should make it the holy trin­ity, by giv­ing the sav­ings rate the same im­por­tance and promi­nence. In­dia’s sav­ings rate is down from its peak of 37% by al­most eight per­cent­age points. This is a con­cern as with­out ad­e­quate and sus­tained sav­ings, in­vest­ments, which are a core driver of growth, will not hap­pen. While I ap­pre­ci­ate most macroe­co­nomic mea­sures are in­ter­linked, it is im­por­tant to ap­pre­ci­ate that the sav­ings rate is deeply de­pen­dent on eco­nomic sta­bil­ity and in­clu­sion, im­pact­ing both the abil­ity and the will­ing­ness of cit­i­zens and cor­po­rates to save. Cre­at­ing con­di­tions for sta­bil­ity and in­clu­sion, through the right pol­icy en­vi­ron­ment and its rig­or­ous im­ple­men­ta­tion, should be the key gov­er­nance goal of the govern­ment. The crit­i­cal im­por­tance of In­fra­struc­ture on the in­vest­ment agenda is ob­vi­ous. Un­less we trans­form our­selves on the in­fra­struc­ture is­sue, we are doomed to a bleak fu­ture. This is not merely a mat­ter of land ac­qui­si­tion laws, but also in­cludes is­sues re­lated to struc­tures of fi­nanc­ing, pro­cesses for al­lo­ca­tion of projects, other ap­provals, risk mit­i­ga­tion, ex­e­cu­tion on the ground etc. It also re­quires long-range plan­ning and de­sign of an in- tegrated in­fra­struc­ture base for the coun­try, in­clud­ing our cities. This must be driven by a vi­sion of what we would like In­dia to be in 25-50 years from now, in­clud­ing on the crit­i­cal mat­ter of en­vi­ron­men­tal sus­tain­abil­ity (which also has im­pli­ca­tions on our en­ergy in­de­pen­dence).

A cru­cial di­men­sion of sav­ings and in­vest­ments is sharp con­trol over dis­tortive sub­si­dies. I am not re­fer­ring to ex­pen­di­tures on ba­sic safety and se­cu­rity nets for cit­i­zens, which I think are nec­es­sary. The ref­er­ence is to sub­si­dies on power, fuel, fruit-less sup­port for cer­tain in­ef­fi­cient pub­lic sec­tor com­pa­nies etc. It also refers to im­plicit sub­sides in the form of leak­ages and con­doned in­ef­fi­cien­cies. Let me briefly touch on ed­u­ca­tion, which to my mind is among the two most im­por­tant ar­eas for the long-run well­be­ing of In­dia (the other is health and nu­tri­tion). I think the most im­por­tant is­sue in ed­u­ca­tion is that we must reaf­firm our com­mit­ment to an in­clu­sive and high-qual­ity pub­lic ed­u­ca­tion sys­tem both at the school and higher ed­u­ca­tion level. Pri­vate (for-profit) cap­i­tal can­not ad­dress In­dia’s fun­da­men­tal ed­u­ca­tional needs, but mis­tak­enly that seems to be our cur­rent de­fault hope. We will re­quire an in­crease in pub­lic in­vest­ment in ed­u­ca­tion, but even more, we will re­quire ex­e­cu­tion of al­ready ar­tic­u­lated (and good) pol­icy di­rec­tions. Our con­tin­ued and fu­ture pros­per­ity as a na­tion is de­pen­dent on this.

In my as­sess­ment, ad­dress­ing these (both econ­omy and ed­u­ca­tion-re­lated) is­sues re­quires not only pol­icy smarts, but most im­por­tantly po­lit­i­cal will and courage. The de­ci­sive man­date pro­vides an op­por­tu­nity of a life­time.

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