Arvind Subramanian (right), in conversation with Prannoy Roy.
Former Chief Economic Advisor Arvind Subramanian speaks to NDTV’s Prannoy Roy on a range of issues in front of the Indian economy today. From the bad debt crisis in the banking sector to the growing agrarian distress, the Dr Subramanian weighs in on the good, bad and ugly of Asia’s third-largest economy.
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How realistic is the Prime Minister Narendra Modi’s vision of doubling farmers’ income in a couple of years?
“Increasing productivity is difficult but you can do it through measures like the universal basic income,” Arvind Subramanian says.
India’s agriculture productivity far behind China, US – at “terrifying” levels in dollar terms, says Prannoy Roy.
Arvind Subramanian says the centre and states should work together on the agriculture sector like they did for GST. And then he backs a radical idea: “Farmers should get universal basic income.”
On the problems faced by farmers, Arvind Subramanian says, “I don’t think we fully understand why prices are falling. But old remedies of MSP etc. are not working.”
“Why not have direct benefit transfer to farmers?” he suggests.
Analysing India’s journey so far, Arvind Subramanian says India went from an era of crony socialism to stigmatised capitalism.
“There was a time when there was lot of government regulation and corruption in that. But after we overcame that, we went to an age when the private sector carries a stigma from a feeling that fat cats will get away,” Dr Subramanian said.
“There was a delay in acting. IL&FS came out of the blue but where were the regulators?” Arvind Subramanian said.
So how does he suggest India should handle its bad debt crisis? “My proposal is for a deep dive into NBFC (Non Banking Financial Company) and do an AQR or asset quality review,” Arvind Subramanian said.
Was the IL&FS crisis India’s Lehman Brothers moment? “Not really. India is a resilient economy. The crisis is not big enough,” Arvind Subramanian said.
Arvind Subramanian says though there was a delayed response on part of the RBI in tackling the mounting bad debt. However, the former Chief Economic Advisor praises how ex-RBI governor Raghuram Rajan handled the situation.
The government deserves credit for a the new bankruptcy law, says Arvind Subramanian
India’s bad debt problem is bigger than earlier thought:
Arvind Subramanian says the bad loans problem has been festering for a while now. “About 8-9 years and counting,” says Dr Subramanian.
The three underlying problems in front of India’s economy today are:
Here’s what we are going to discuss in the programme today, says Prannoy Roy
– The underlying problems in front of the economy
– A look at the various sectors; and
– A look forward