We are falling very short on aspirations, says NITI Aayog vice chairman Rajiv Kumar

By: | Published: November 26, 2017 4:22 AM

NITI Aayog is not a replica of the Planning Commission. It has been designed as an ‘action tank’ more than as a think tank.

Planning Commission, rajiv kumar, narendra modi, Health Ministry,  NSSO, gst, National Statistical Commission, public private partnershipDr Rajiv Kumar with Ravish Tiwari of The Indian Express Abhinav Saha

RAJIV KUMAR: NITI Aayog is not a replica of the Planning Commission. It has been designed as an ‘action tank’ more than as a think tank. The plan is to come up with ideas — not about what to do, but how to do it. NITI Aayog also serves as a feedback mechanism to the government and the Prime Minister, because we also monitor the performance of the various ministries. The other big job is to bring the states on the same page on subjects such as primary health; it’s a state subject. In the same way, can we think of ways of improving primary education and get the states to converge? We are doing this for child nutrition, which is a huge kalank (taint) on us. We are also trying to get some competition going between the states by ranking them. We are hoping that naming and shaming will help improve things. We are doing this for a range of things. We will do this soon for district hospitals. We have devised a 20-odd criteria index, and we will start ranking the states very soon.

ABANTIKA GHOSH: NITI Aayog is believed to be keen on public-private partnership (PPP) in health. In September, a seven-year-old girl died of dengue-related complications. Her family alleged that they were billed about Rs 15.6 lakh for a two-week hospital stay, including for 611 syringes and 1,546 pairs of gloves. It is not so much a matter of overcharging, as of lack of regulation. There is a perception that private hospitals are allowed to get away with everything. How does the NITI Aayog and the government envisage a partnership with private hospitals if it is not regulated?

There can be different forms of PPP. I am very reluctant about handing over public facilities to the private sector because I am not sure if we can regulate them. All these private hospitals, including the one that you mentioned, they have been given land at a very cheap cost — it is really like a public asset — on the premise that they will do what they promised. Regulation is difficult, especially in health. Therefore, I have been very reluctant and have asked them (the government) to have a relook at the PPP proposal. This was for district hospitals. On the other hand, there is a huge scope for bringing in people’s participation for better delivery of public health. Community participation in health can be key, especially for communicable diseases and children’s welfare. I am convinced that private hospitals in the tertiary space need far better regulation than what is in place now. They must be made to stick to what they have promised. The Fortis (case) reflects what goes on in the private sector.

ABANTIKA GHOSH: In a letter, sometime ago, NITI Aayog told the Health Ministry — when they were seeking extension of the National Rural Health Mission (NHM) — that a mission cannot go on forever, it needs to have finite goals and timelines. What kind of health structure should we have?

We are actively considering it, and I hope you will hear about it sooner rather than later — a universal health insurance coverage, which is completely subsidised by the government, for families below the poverty line. There will be a formula for those above the poverty line as well. Implementation, of course, will be the key here. But that is what we could replace the NHM with, and in that you can involve the private sector with careful monitoring and regulation.

SHOBHANA SUBRAMANIAN: You have said earlier that we should focus on employment and not growth, because growth is meaningless without employment. So far we have seen jobless growth. In fact in the last three years, anecdotally, we have lost jobs. Do you realistically think that any jobs will be created in the next two-three years or are we looking at more job losses? And how many jobs will we be able to create?

If we were able to do that, or if we were doing that, we would be the Planning Commission. We can’t give you a forecast on jobs. In a private-sector dominated economy, in an economy that is entrepreneurial, it is impossible for anyone to tell you that. Secondly, the biggest issue with employment is that we don’t have data. The NSSO (National Sample Survey Office) report comes once in five years. My predecessor headed a task force to improve data. It is in the works and we will get the first estimates about a year from now. You will then get a quarterly estimate for jobs, which is a big deal. In the meantime, there are three very distinct views here. One is that of the Centre for Monitoring Indian Economy (CMIE), which said there were 15 lakh job losses (during January-April 2017), anecdotally. That is the number which is bandied around. This, I think, is reinforced by what is happening in the education sector — closure of engineering colleges, lack of placements, lack of admissions etc. Clearly, there is job loss in the organised sector, but has that been replaced with jobs in the informal or unorganised sector is a question that we need to ask. Surely, in these sectors demonetisation and the Goods and Services Tax (GST) would have shocked smaller players.

The second view is that of Manish Sabharwal of (chairman and co-founder) Teamlease, who says there is no job problem in the country but a wage problem. (He argues) that people have jobs that they don’t like, that are very far away from aspirations, but everybody has got something or the other. He gives a lot of anecdotes on this. That is another view, but I haven’t bought that in a long time. I don’t know.

The third view is of people such as Mohandas Pai (former member of the board of directors of Infosys), who say that all the jobs in the economy are not being totalled at all. He says that the services sector is completely unmapped and that is where a lot of jobs have emerged. They would argue that it is in the organised and unorganised service sector, and in the ‘self-employed’ sector where India has bolstered; this would then mean that there are no job losses; in fact, there is a job increase.

So there are these views. My own view is that whatever may be the case, we are falling very short on aspirations and this is going to come up in our face very quickly. The upper caste mobilisation of the Marathas, Jats, Gujjars and the Patels is a reflection of that; the young are not happy with the situation they are in. Therefore, let’s give this subject due attention, irrespective of whether or not it is low wage or informal job. Clearly, there is lack of good quality jobs. My argument has been that policy should therefore be focussed on sectors where such jobs can be created. This is why I have been constantly arguing for open labour subsidies for labour-intensive sectors. We have given capital subsidies for years, then why can’t we give labour subsidies? If we do that, we will probably have the right growth.

RAVISH TIWARI: There seems to be a lack of statistics, not just for jobs, but also for sectors such as health and education. We are relying on states for most of our data, but they don’t seem to have the capacity to collect it. For a modern, $2 trillion economy, data is very valuable. How do you plan to get that done?

I don’t think our once very celebrated statistical system is up to the mark now. We need to revamp it. That is the job of the National Statistical Commission. I have been speaking to the chief of the commission, and we want to come up with significant changes in the collection of statistics across the board. Unless we do that, we are in a sense making policy by fluke. A lot of data will also get collected by the rankings that the NITI Aayog is coming up with. The restructuring of the the statistics system will be a long-term process.

RAVISH TIWARI: Is there somebody who is taking the ownership of this revamp?

It has to be the combined effort of the Statistical Commission and NITI Aayog. I think you will see action on it next year.

PRASANTA SAHU: You recently interacted with the Uttar Pradesh administration about their socio-economic policies. What kind of ideas did you propose to the state?

This (UP visit) is part of my attempt to go and meet all chief ministers. That is also the big difference between NITI Aayog and the Planning Commission, that we are going to reach out and talk to people. In June this year, NITI Aayog came up with an action plan for Uttar Pradesh. It is a very detailed action plan, with timelines and targets. They agreed with it. Recently, we reviewed it, hoping that other states will also work with us to do things in this manner; by creating timelines and targets. The remarkable thing was that all the department heads were there and were willing to subject themselves to these targets and timelines. There has been progress on several fronts, but not on all. We expect for good news from Uttar Pradesh fairly soon. The one area that we discussed was law and order. We pointed out to the CM and the others that it was one of the key areas of doing business, or else you won’t get any investment. The other areas of discussion were electricity, state roads and education. This is probably the first time that something like this has happened in UP.

SUNNY VERMA: The day you took charge, you mentioned the need to have a Bharatiya/Indian model of development, where policymaking was in sync with the ground realities. Have you been able to flesh out what that model would be?

Not yet, but we have begun making the efforts and you will hopefully see the results soon. The Bharatiya model will be less about wishful thinking and more about the constraints that we want to tackle. What I wanted to say was that don’t bring us a model from abroad. I didn’t believe in it when I was young and now, as I have greyed, I have realised that we are pretty much sui generis (of its own kind) and we need to take that into account.

SUNNY VERMA: What is your and NITI Aayog’s view on universal basic income?

I can’t speak on behalf of NITI Aayog at the moment because we haven’t discussed this entirely. Personally, I am quite against the idea. It is again one of those things that has been imported from abroad. We can neither afford it, nor do we need it at this stage. We should do what we need to do, which is to plug the leakages. There is a whole system of income transfers called subsidies. Let’s make that better with lesser leakages, better delivery, better targeting of beneficiaries etc. Apart from taking care of those who are vulnerable and below the poverty line, why would we want to assure the middle class and say, ‘Young man you can take all the chances in your career but you will still get Rs 10,000 a month’. I have got absolute wretched poverty and 38% of my children are born stunted, I should take care of that. All these are just fancy ideas which I
don’t need.

ANIL SASI: You have been a part of the industry, and now you are on the policy side. What are the efforts that the government has made in the past three years to boost private investments? What are some of the changes that you, being from the other side, suggest should be made?

It is not easy to answer this. The lack of private investment as reflected in the slower growth of credit offtake of public sector banks, is not the right way to look at it, because that is exactly what people keep talking about — the 4-5% growth rate, decadal low etc. If you start including the private sector banks you will find that it is very different. No doubt, however, that project lending — which is where the public sector is more focussed on, as opposed to retail lending, which is where the HDFCs and the ICICIs are more focussed on — has suffered.

Secondly, a lot of this project lending has now happened through corporate bond issuance, which has gone up enormously.
Thirdly, IPOs have picked up in a very significant way. So I think it is better to look at the entire capital market before we say that the private sector hasn’t invested at all.  Also, a large part of our investment used to have an excess capacity in-built into it, which wasn’t declared — you made up by producing stuff that was not taxable. Now, that has changed. The private sector is yet to come to grips with this change in the rules of the game. They will either pay it or find the good old India jugaad to beat it. The latter is not happening.

So I would suggest that the government sticks to what it is doing, in terms of GST, benami property, insolvency etc. In a more formalised economy things will be more sustainable from what we have had in the past. How long will that take? I think another two quarters or maybe less. This is the reason that you see much more FDI than before.  What I bring from the private sector: let’s not go back to any discriminatory, subjective sort of investment regime where your only competitive advantage was that you had the inside track to the government. It has been finished. It’s all online and it doesn’t matter if you know Rajiv Kumar or not. This is how you will get Indian industries to become part of global and regional production chains. The truth is that they are not. Why are they not? Because we are not in that system of doing things and that is what we need to put in place.

RAVISH TIWARI: One of the things that past governments and even the present dispensation has not figured out is the relationship with the RBI. How do you look at it?

We have taken a very big step by constituting Monetary Policy Committee. I have been critical of the RBI, and I remain so, for their handling of the currency rate. In India we need to assure businesses that your currency will not get appreciated in the next five years. You have to reverse this long-term, inherent bias against export in Indian business. It hasn’t happened and I don’t know why the RBI won’t do it. That is one part. The second part on the interest rate: I hold our commercial banks more responsible than the RBI. Repo rate is 6% , lending rate is 11. Why? It’s a fact that the savings deposits in banks have increased exponentially, but they pay no more than 3-4 % on these deposits. Given the cost of funds that the banks have, why should their lending rates not be coming down, especially for non-AAA borrowers? I think it is about the fact that you don’t have sufficient competition in the banking sector which enables the banks to do what they are doing at the moment.

The other part is that there is this large informal credit market. I don’t know the rates now, but earlier they were 2.5 to 3% a month. That is where the ordinary guy is borrowing from. That is what keeps up the lending rates of the banks rather than the EPFOs (Employees’ Provident Fund Organisation). The EPFO argument that all the savings is just going there is just
false. A very small part of the household savings go to government guaranteed credit funds.

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