Business Today

PSUs NOT TO BE EXCLUDED FROM BUYING BAD ASSETS

- Arvind Panagariya @joecmathew and @rajeevdube­y

than three-fourth of the central government budget.

Let us look at the National Health Policy. It talks about a steep increase in public expenditur­e, but to do that, an annual increase of at least 20 per cent for the next six-seven years will be required. Is your projection in sync with the Ministry’s standalone document?

We have only considered the central budget for the next three years. And we are generally conservati­ve in our revenue estimates. If the government’s revenue for 2015/16 is roughly `20 lakh crore, it should be `27 lakh crore in nominal terms by 2019/20. That gives you an extra `7 lakh crore and that is the money we are using to reorient the expenditur­e compositio­n. We have tried to move that additional money to sectors such as health, agricultur­e, rural developmen­t and infrastruc­ture. This allows us to increase the central government’s expenditur­e on health from `30,000 crore in 2015/16 to `1 lakh crore in 2019/20. Therefore, our estimate goes a little farther than what the National Health Policy envisages.

Did you also recommend that public sector undertakin­gs ( PSUs) buy bad assets?

No, we didn’t. But in principle, there is no reason why we should exclude PSUs from buying those assets. They can play a key role in ensuring that collusion among private buyers does not result in asset undervalua­tion. But in the longer run, we must continue with strategic disinvestm­ent.

You have submitted a disinvestm­ent plan for PSUs. Has the government considered it seriously?

The strategic sales that we have recommende­d will happen.

What will be the suggestion­s for the 15-year vision and the seven-year strategy?

We have a tough task here. Over a three-year horizon, you have a better handle on what is likely to happen and what the constraint­s are. Given the pace of technologi­cal change and the rapid geopolitic­al shifts, changes over a 15-year period are a lot more difficult to predict. We need to figure out where we will be in 15 years in terms of per capita income, health, education, employment, urbanisati­on and other such variables. The seven-year strategy can be more concrete. After three years, there will be an appraisal and at that point, we can reassess whether the original seven-year strategy should be rejigged.

Will there be an annual review of the three-year agenda?

I am sure the PM will ask at some point what we are supposed to implement and what we have actually implemente­d. ~

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