Gita Gopinath, professor of economics at Harvard University, does not see a compelling proof that 70% of the population needs free access to wheat and rice guaranteed by the food security Bill. In a conversation with Arup Roychoudhury and Aftab Ahmed, she predicts that the next government will also have to grapple with the (high) fiscal deficit situation. Excerpts

Do you think the measures taken by the government to contain deficits are prudent in the long term?

I think everybody will agree that just moving around the numbers to make your reported deficit look better than it actually is, is problematic.

What will improve the deficit is passing on the cost, increasing prices. They (the government) have done that, so that is a positive sign. Whichever government comes to power next will have to deal with the fiscal situation. We have the food security programme, which makes it more difficult, but they are going to have to find ways to deal with it.

Do you think the food security Bill in the current form is adequate?

I haven’t seen very compelling evidence that 70% of people in the country need access to free wheat and rice. You can look at where you see food inflation is coming from. Its coming from high proteins like eggs and meats, it’s coming from vegetables. Certainly a percentage of the population do need food at subsidised prices. But from the studies I have seen from developmental economists, it does not seem like such a huge part of the population needs that. I am skeptical of that. Certainly, I prefer cash transfers over any form of kind transfers. One concern is distortion of prices, because the whole process of procuring, storing and transporting the foodgrains will add layers of costs.

Do you think government is likely to spend higher on populist measures due to recent electoral losses?

That’s very much in the realm of possibility. If one looks at history and political cycles, you have always had increases in spending before elections. But (finance minister) P Chidambaram said that are going to try hard to stick to the targets. So my guess is as good as yours on this matter.

What according to you are causing delays in infrastructure projects in India?

I think we know that there is a way out. I mean if you look at the finance ministry under (Pranab) Mukherjee and now under Chidambaram, there has been a change. There weren’t any insurmountable challenges that these projects couldn’t be cleared. I think there was a sense of complacency in the past that somehow growth would continue at 8%. There was a rude realization that that’s not happening. And once you take the right policies, these things can be dealt with.

Is India’s crisis elf-created or due to a general slowdown in the global economy?

I don’t think the global factors are such a big deal. It’s true that if your export to GDP is 27% and global demand declines, there will be a decline in exports. But the bigger problem is not global demand (slump), but supply constraints (in the domestic economy). Given that India’s share of world exports is 1.6%, we are a small player. We really need to increase our share of that pie.

What needs to be done to get back to higher growth path?

We need a second round of what happened in 1990, if there is enough will and energy to make that happen, to go through a second set of serious reforms. I mean everybody knows what the problems are. It is already clear what needs to be done. But in the last few years, things have happened in a very haphazard way, it’s like fighting the next fire. Every time there is a downgrade, we do something, we are reactive and not proactive.