1. India GDP growth rate in Q2 likely at 6.2-6.3 pct: NITI Aayog VC Rajiv Kumar

India GDP growth rate in Q2 likely at 6.2-6.3 pct: NITI Aayog VC Rajiv Kumar

The Budget for 2018-19 should focus on the social sector and an attempt should be made to provide universal health insurance cover to citizens.

By: | Published: November 23, 2017 6:02 AM
Rajiv Kumar, NITI Aayog VC, India GDP growth rate, Moody’s, india poilicy, social sector,  GST Council , Fiscal deficit,  health insurance cover India’s policy objective has to be employment generation, acceleration of growth in employment- generating sectors and inclusion of the last decile.

The Budget for 2018-19 should focus on the social sector and an attempt should be made to provide universal health insurance cover to citizens. In an interview with Prasanta Sahu and Saurabh Kumar, NITI Aayog vice-chairman Rajiv Kumar says the think-tank can play a role similar to the GST Council for the social sector to generate better outcomes. Excerpts:

Moody’s has upgraded India’s rating. What more needs to be done to maintain and improve the rating?

One can’t make policy with an eye on pleasing rating agencies. India’s policy objective has to be employment generation, acceleration of growth in employment- generating sectors and inclusion of the last decile. That’s why NITI is now focusing on 115 most backward districts to improve human development index. Nobody expected what Moody’s did after 14 years. The rating upgrade came because of the solid structural reforms in the last two-and-a-half years. Now, we have to focus on consolidation of reforms. For example, we have to get GST stabilised and get it to converge into three tax rates. If we move in that direction, we will see massive formalisation of economy and expansion of tax net.

In ease of doing business, India’s rank has jumped by 30 places. If we persist with reforms on ease of doing business, it will force other rating agencies to improve India’s rating. NITI is trying to do an investor survey and rank states. Why not institutionalise domestic investor survey on investment environment and respond to the feedback received — it will improve ease of doing business. It will accelerate investment, employment and growth.

What needs to be done in the social sector?

We need movement in health and education. Nearly 40% of children born in India are stunted and underweight. Millions of children enter the workforce (later in life) without fully developed cognitive ability. How will they contribute to the new economy? Nearly 50% of our mothers are anaemic. We should replace growth targets with employment targets. If you have an employment target, everything falls into place. There is an employment elasticity of growth. If you maximise employment, you will maximise growth. Labour-intensive manufacturing, exports, services, tourism should be even more emphasised. Why should the rupee appreciate in real terms? Our policy should assure businesses that the rupee will not appreciate in the next five years.

What should the upcoming Budget focus on?

Focus should be on the social sector. We should have real attempt at providing an universal health insurance cover. Two sectors — health and education — are neglected as they are in the concurrent list (both Centre and states make laws). Like the GST Council, NITI Aayog can be the council for the social sector with a common minimum programme of action. Focus should also be on rural infrastructure, irrigation and roads. Quite often schemes announced by the Prime Minister remain underfunded. Successful implementation of Pradhan Mantri Gram Sadak Yojana, Krishi Sinchayee Yojana, Deen Dayal Upadhyaya Gram Jyoti Yojana and Pradhan Mantri Sahaj Bijli Har Ghar Yojana (Saubhagya) will change the face of the country’s agriculture.

What’s your stand on fiscal deficit glide path?

I believe revenue deficit should be zero. Fiscal deficit doesn’t matter as long as it increases productivity.

The Q2FY18 GDP data is due this month-end. What is your assessment?

I am expecting 6.2-6.3% for Q2 (it grew 5.7% in Q1), and for the full year closer to 7%. Second-half growth has to be 7.5%.

What is the 2022 Vision NITI Aayog is working on?

It will detail how a sector’s performance is going to improve, rather than what should be done. For example, on malnutrition we are preparing an action plan and strategy on how to eradicate the problem. We want to strengthen district hospital’s capacity. We will start a pilot project soon to double farmers’ income. Among others, we are working on action plans for modernisation of agriculture.

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