Economist Arvind Panagariya was enjoying teaching Indian political economy at Columbia University until Prime Minister Narendra Modi assigned him the task head Niti Aayog as its first vice-chairman. But, he has no regrets. While enjoying the comfortable life abroad, he was always pained by three things that ailed the Indian economy; policy paralysis, problems in land acquisition and rising non-performing assets (NPAs) of banks. Now, he has got an opportunity to help India in removing these impediments. He is certain that Indian economy would bounce back to the phase-IV (1988-2006), i.e., ‘triumph of liberalisation’ as mentioned in his book ‘India: The Emerging Giant’, which is described as the “definitive book on the Indian economy”. In an exclusive interview with Rajeev Jayaswal of Amar Ujala, Panagariya talks about the medicine to revitalize the Indian economy, particularly agriculture. Excerpts:

Q: Your book, ‘India: The Emerging Giant’, distinguishes the country’s economic development into four phases. You described the fourth phase as ‘triumph of liberalisation’. If you have to write a sequel of your book, what would be the next phase? There is a general perception that the policy paralysis gripped the entire economy in the past 10 years.

Ans: It may not be called a sequel. You may call it revision. Yes, I may revise the book. Seeds of the next phase was sown in 2009 when projects could not take off because of regulatory reasons. It was policy induced decline.

Q; Don’t you think that the decline, which started during the previous UPA regime, still continues?

Ans: A lot has changed since 2013-14. Growth rate is back between 7 and 8%. Inflation is down. Current account deficit is back to 1-2%. Foreign exchange has risen. Pace is slow because of several reasons, mainly due to global conditions. Decline in exports is seen in last few months, which is largely induced by (crude) oil prices. As a result exports to oil rich countries declined.

Q: What is the medicine? The government wants that the policy reforms should target ‘dalits, shoshits and vanchits’ (the poorest of the poor), who are farmers. So, no policy reform would give desired results unless agricultural reforms take place.

Ans: We have set up a task force for agricultural reforms. We are holding discussions with various stakeholders. There is no one solution. Policies should be framed keeping regional variations in mind. For example, the western India is well irrigated, hence it is less dependent on monsoon. On the other hand, the eastern part is rainfed.
So there is no single medicine. In the western region, there is a need to reduce dependence on rice, because the water-table has fast depleted. For east, we need to have irrigation system. Take usage of fertilizers. There is an overdose of urea, which is deteriorating soil condition. But, in the east, urea is underused. There is no universal ratio of fertilizer. The ratio depends on the soil quality, the crop and the climate. Our policies must take all these factors into account. Use of digital technology would be of immense help. Soil card is also good instrument. Gujarat is doing well in this regard.
Also, a separate sub-group is set up to look into issues of the hilly region such as Uttrakhand as Himachal Pradesh, because their issues are different. A group under Mr. T. Haq is specifically looking into these matters.

Q: Will the Task Force on Agriculture reflect on these issues? Do you think that state government have enough will power to make region-specific policy changes, suggested by the task force?

Ans: Most states would do. Votes are there (rural areas) and no chief minister can ignore it. The taskforce is discussing issues with states. Major issues are land leasing legislations and digitalization of land records. We had different land tenure systems in different states, some had ‘zamindari’ some had ‘raiatwari’. We need to systematize it and have proper land records, which will help in land leasing.
Land leasing laws are restrictive. People fear to lease their land because existing laws are tilted towards tenants. The farmer is the ultimate loser due to that. Often the owner of land is not the cultivator. But, on land records, the owner is registered as the cultivator. Thus, in case of hailstorm, flood or draught; the recipient of compensation is the owner and not the actual farmer. Therefore, land leasing laws should be changed. These measures will also help in direct transfer of fertilizer subsidy.

Q: But, land leasing laws and digitalization of land records require political will of states. Specially, the term ‘leasing’ in the Indian agriculture sector is not politically conducive. How will you convince them?

Ans: Most of the state chief ministers are progressive. They all are in favour of reforms in agricultural sector. It is their political necessity. Somebody suggested that the term leasing could be substituted with licensing.
Q 6: Is it similar to contract farming, which your predecessor in the previous UPA regime wanted to pursue?
Ans: This is a separate issue. It is to give remunerative price to the farmer. Today, farmers get only a small portion of market price of his produce. It should be seen in the context of APMC (agricultural produce market committee). Contract farming is one of the ways to give remunerative price to farmers. As an economist, I see it as one of the entitlements, which should be used. Better ties with food processing industry will not only remove interference of middlemen but also ensure better prices to farmers for their produce. The Vajpayee government had initiated several measures to ensure remunerative prices to farmers and those policy measures should be revived. APMC reforms are required. Bihar has removed it, but something should have replaced it. Several existing policies are beneficial for consumers and not farmers.

Q: India’s agricultural sector is in bad shape? What is the one single factor that could revitalize agriculture?

Ans: Ultimately, solution lies in industralisation. There should be an industrial policy that would create jobs. This will reduce pressure on land. Currently, farmers are cultivating in half-an-acre or an acre of land. This problem will ease with creation of industrial jobs.

Q: Industries would require land. But, political opposition to land acquisition is one of the major impediments. What is the solution?

Ans: Could you guess, what is the total land for non-agricultural use, including houses, offices and industries? It was just 8% of total land in 2012. Fifteen years ago it was 7%. In these 15 years, we used only 1% land and grown multiple times of what we had done in previous 50 years.

Q: Were political parties not consulted before bringing the land acquisition legislation in the parliament?

Ans: In the middle of June 2014, all CMs (chief ministers) were consulted and all of them wanted changes in land acquisition. Hence, the ordinance. Naturally, it (government) was obliged to bring the law. For them (the opposition parties), it is easy to forget the history and blame … it is in the concurrent list and Tamil Nadu, a non-BJP state made changes.

Q: Current state of the economic growth is not perceived to be robust. Why?

Ans: It is wrong to say that. Yes, expectations were high. But there are achievements. Inflation is down by 3-4%. Positions of current account deficit and foreign exchange reserve are better. Growth is between 7 and 8 percent. And you must agree that this government has been able to check corruption. Now, PSU banks do not have any pressure on granting loans (to any particular entity). The government has stopped making anti-growth policies. However, ease of doing business is yet to show its impact, but it will catch up. Labour reforms have taken place, Inspector Raj has ended …

Q: But, Inflation is down due to global slump in crude oil prices. The government has no role in that?

Ans: Fiscal deficit is reduced not only because of decline in oil prices but also because expenditures have been reduced substantially.

Q: We are back to the same question, how to boost the economy?

Ans: Job creation is the solution. As an economist, I believe that if the large enterprises are not successful, SSIs (small scale industries) and SMEs (small and medium enterprises) would not grow. Ancillary units grow around big industries. It is sad that we don’t have economies of scale. In textile, even Bangladesh has surpassed us. We have about $17 billion (textile industry), Bangaladesh, $20 billion and China is far ahead at around $180 billion. We need large funds in labour intensive industries. Besides, you need good eco system, which is infrastructure, land, labour etc. Even solution to the rural poverty depends on the success of job creation.

(Published in Amar Ujala, Mon, Dec 14, 2015, http://epaper.amarujala.com/dl/)

Bharat Petroleum Corporation’s Chairman S Varadarajan was among the first five oil companies’ executives to give up LPG subsidy about a year ago. It was the government’s baby step towards something that appeared impossible. By the start of 2015, the voluntary scheme could attract only 21,300 givers. Critics quickly dismissed it as a gimmick. In India, subsidies are birthright.

Some advised the government to force income-tax payers to pay market rates for cooking gas cylinders. Others suggested weeding out rich beneficiaries by using super computers with the help of biometric aadhaar identification. Their cause of concern was ballooning LPG subsidy, which had crossed Rs 46,450 crore in 2013-14. There was near unanimity; rich and affluent lack conscience and they would not give up anything voluntarily even if it is a matter of couple of hundred rupees.

But, the government did not give up. In January, Finance Minister Arun Jaitley opted out of the subsidy scheme.  The scheme got further impetus when Prime Minister Narendra Modi launched the ‘give it up’ movement at the Urja Sangam-2015 on March 27.

For skeptics, it was merely a new version of the ‘opt out of LPG subsidy scheme’. But, ‘give it up’ was not just renaming of an old campaign. The new slogan had an instant mass appeal.  It appeared to be a carefully crafted punchline to link the movement with renunciation, an innate element of Indian culture. It made the movement more acceptable compared to the materialistic overtone in the ‘opt out’.

Secondly, PM skillfully attached a noble motive to the scheme while launching it at Vigyan Bhavan. He did not say that the move would reduce government’s oil subsidy bill. He said, the savings would be redirected to the poor so that they will also enjoy clean fuel. This silenced the cynics. Now, their argument that savings from the scheme would be small compared to total oil subsidy became irrelevant. From a government scheme, it became a movement to provide clean fuel to millions of housewives who are forced to use polluting firewood and dung-cakes.

So far, the ‘opt out of LPG subsidy scheme’ had attracted about 2.8 lakh customers, leading to savings of over Rs 100 crore. The numbers, however, swelled with the repackaging. Donors jumped by over 530% at 17.67 lakh by the first week of August. In monetary terms too, savings swelled eightfold.

This argument gets reinforced further if we compare figures between July 28 and August 8. Over 3.8 lakh new customers have joined the ‘give itup’ club in few days. One of the reasons for this acceleration could be the latest advertisement in television and FM channels. In the advertisement, after hearing PM’s appeal to give up cooking gas subsidy in favour of the poor, the protagonist decided to act on his advice immediately. He remembers how his mother suffered because she could not afford clean fuel. The advertisement catches imagination of affluent middle class people who saw their grandmothers or mothers braving smoke and harmful gases to feed family members.

That’s not all. Credit must be given to the government for making this sacrifice easy and non-bureaucratic, thanks to the use of technology. ‘Giveit up’ is a cake walk now, without physically presenting yourself to the gas agency. Even outcome of your action is visible on the “scroll of honour” section of the website. They also record growing numbers of givers and savings due to that. But, some gas agencies are lagging behind in providing data pertaining to the purpose of this ‘give it up’ movement. They do not give numbers pertaining to beneficiaries. It is only Hindustan Petroleum Corporation Ltd (HPCL), which gives the number of below poverty line (BPL) family getting the benefit of giving up. According to the company, more than 4,43,500 BPL consumers could get access to the clean fuel because over 5,19,000 HPCL customers decided so. It is for sure that Indian Oil Corporation (IOC) and Bharat Petroleum Corporation Ltd (BPCL) have also awarded these spare connections to the poorest of the poor. But, data is not visible on their respective website. Success of such movements depends on clear vision, sound reason and absolute transparency.

Oil Minister Dharmendra Pradhan could make this a national movement because he did not give up to criticism. Initially, it seemed impossible because in the modern contest, relinquishing subsidy claims could be equated with the ‘Bhoo daan” movement. Credit to this success goes to the 17.7 lakh common citizens. But this is just the beginning. Now time has come for Members of the Parliament, top bureaucrats, regulators and public sector honchos to lead by example. The government should display their names on their official websites to inspire common citizens.

On June 21 the world acknowledged that yoga is one of the key remedies to counter side effects of widespread consumerism. It took several centuries for intelligent global citizens to realize that the unison of body, mind and soul could be the key to fight killer stress and to remain healthy; and such a system already exists. Thankfully, the UN General assembly set aside all conspiracy theories while accepting Prime Minister Narendra Modi’s proposal to celebrate June 21 as the International Yoga Day.

In this cyber age, the world is a melting pot. Importing cultural traditions to improve life and environment is a prudent option, which is evident in this UN Resolution. It recognizes that “yoga provides a holistic approach to health and well-being” and “wider dissemination of information about the benefits of practicing yoga would be beneficial for the health of the world population”.

Indian culture holds another great custom that can significantly reduce miseries of world citizens. The tradition of Indian greetings is still in practice, but within the four walls. ‘Namaskar’, ‘pranaam’, ‘salaam’ or ‘charan-sparsh’ (touching feet) are practiced even now. But, these are mostly within the family and occasionally seen during marriages and family functions.

Children shaking hands with parents while seeing them off at airports or railway stations and students extending hands to teachers while congratulating them for major accomplishments are common sights. This western tradition is now a global trend. There is nothing wrong in it. After all, shaking hands is the international practice of greeting. It is customary among heads of countries to shake hands after signing treaties. Corporate honchoes do the same when they conclude deal.

But, many people privately abhorred this tradition when severe acute respiratory syndrome or SARS became epidemic in early 2000. Later, fear of swine flu or H1N1 virus popularized hand sanitizers. Some health conscious people keep hand sanitizers handy and often use it after shaking hands with partners, executives and strangers. They shake hands in public and sanitize them in private. But, none of them can afford to decline any opportunity to shake hands.  Thus, a tradition, borrowed from the West, is only benefiting fast moving consumer goods (FMCG) companies.

‘Namaskar’, ‘namaskaram’, ‘namaste’ or ‘pranaam’ is a customary greeting, which is a gesture of respect made by joining one’s both palms together before chest and bowing one’s head. So is ‘saalam’, where respect is showed without touching the other person. What’s wrong in respecting others while maintaining hygiene? When we change technologies to protect environment, why can’t we modify or charge our folkways and mores to protect health?

If yoga can be considered a tradition for good health of humanity, why can’t traditional forms of greetings? Although, June 21 will not suddenly reverse India’s cultural imports, it will certainly boost the process of modernizing Indian traditions.