Reforms at the Centre and competition among states is leading things forward and would spur growth. This is how Arvind Subramanian, chief economic advisor in the finance ministry, described the current state of the economy. In an interview with fe Bureau, Subramanian, who attended the Vibrant Gujarat Global Summit, said cooperative federalism along with competitive federalism is the right way to move ahead. Excerpts:
What do you mean by competitive federalism and how will it be beneficial?
What I mean is healthy competition among states to attract investment. The Nano project is a classic example of it. It has a model and magnet effect. For instance, if some states are able to attract labour and capital through a good set of policies then it creates pressure on other states to follow them. Going forward we need similar kind of competition among cities. The end result is a combination of good politics and economics.
The Centre has promulgated a number of Ordinances. How much do these comfort investors as they do have to be cleared by Parliament?
We obviously have to make them more secure legislatively to get their full impact. As the finance minister has said, all Ordinances will be introduced as Bills in Parliament in the coming months.
What will be focus areas for the government in the Budget to be presented next month?
We are still in the process of discussing the Budget so I cannot go into it in great detail. But it has to be a Budget, which promotes growth while ensuring that macroeconomic stability is maintained.
There seems to be a change in investor sentiment about India?
There is a palpable change in the mood around India. On part of the government, the job is to increase private investments as well as enhance public spending and that’s the contribution we can make, and when the effects of these are felt, we will see much more effects on the ground.
The World Bank president said India could grow at 6.4%. Your comments?
All we can hope for and work to is improve growth from 5.5%. Actions being taken now will increase growth but by how much, it is difficult to say.