INTERVIEW : ARVIND VIRMANI, CHIEF ECONOMIC ADVISER TO MINISTRY OF FINANCE

This isn’t issue of next Budget; some of these things have been on for 20 years

Subhomoy Bhattacharjee, Sunny Verma
Posted: Friday, Jul 03, 2009 at 0239 hrs IST
Updated: Friday, Jul 03, 2009 at 0239 hrs IST

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: Arvind Virmani, chief economic advisor, ministry of finance, said the domestic financial market reforms get greater urgency in the backdrop of a fall in capital inflows. Virmani, the chief architect of the Economic Survey 2008-09, said: “What I can say categorically is even if 50% of this (suggested reforms) is done in the next 3-4 years that will be good.” In a candid interview with Subhomoy Bhattacharjee & Sunny Verma of The Financial Express at his North Block office on Thursday, Virmani said the survey has a menu of many serious points—and not just ‘verbal gymnastics’—to help India sustain high growth over a long period of at least a decade. Excerpts:

•Are the reform measures stated in the Survey also the government’s view?

Both the previous FM (P Chidambaram) and this FM (Pranab Mukherjee) treat the Economic Survey as the view of the professionals in the ministry, between the CEA and his team. The chapter two (which suggest a series of reform measures) we have introduced only last year. So it’s really a new thing to look at things a little more analytically and also look a little more into the future. It’s slightly more speculative in that sense than the rest of the Survey. I want to be very clear that our professional view is a 4-5 year perspective. It is not something which we think of as 6 months. It’s really absurd for anybody to think that this is issue of next budget that is totally wrong because some of these things have been there for twenty years. The only thing we have done is to try to link it with other issues.

•What are the underpinnings of the Chapter two?

There is an analysis of the fiscal-monetary response. Basically, in terms of judging the temporary elements and permanent elements to the shock and these require kind of different mixes of policy. So there is a little analysis there (in chapter 2).

•Do we need to look at further stimulus package since private consumption growth has tumbled to 2.9%?

I cannot really talk about packages. We can discuss this after the Budget. Consumption was a concern. For investment growth, the slowdown is actually worse than in the previous two slowdowns. It’s not as bad as the worse case, but it’s substantially lower. Some people were thinking it will go negative, so we are lucky. But don’t...

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