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Wednesday, May 27, 2020

‘Bold, not incremental reforms, will help to boost the productive capacity, productivity of economy,’ says Rajiv Kumar

In an interaction with The Indian Express, after the Prime Minister’s speech on Tuesday, NITI Aayog Vice-Chairman Rajiv Kumar said the steps to be announced in the coming days would focus on ensuring that India does not shut itself out from the global economy, even as it promotes self-reliance.

Written by Sunny Verma | New Delhi | Updated: May 13, 2020 12:15:31 pm
Atmanirbhar Bharat Abhiyan, financial package, 20 lakh crore package, Rajiv Kumar, NITI Aayog, financial package, Economy news, Indian express news NITI Aayog Vice-Chairman Rajiv Kumar (File)

Rajiv Kumar, Vice Chairman, NITI Aayog, said the financial package heralds “bold reforms all across the range” that aims at India achieving global competitiveness. In an interaction with The Indian Express after the Prime Minister’s speech on Tuesday, Kumar said the steps to be announced in the coming days would focus on ensuring that India does not shut itself out from the global economy, even as it promotes self-reliance. Excerpts:

What are your comments on Prime Minister’s announcement of a package?

The financial package along with the two announcements that it’s now time for bold reforms all across the range and the fact that India will achieve global competitiveness and not shut itself out from the global economy while remaining self-reliance — these three together are what everybody was looking for. Although I will wait for the details, the Prime Minister has shown he is fully cognizant of what the situation is and willing to take the bold steps.

He said bold and not incremental (steps) … this is really what it is. You will see spate reforms now, as you have seen in case of labour reforms in the states. He is bent upon creating this crisis into an opportunity, and I think this is what will happen. You will see that all the sectors are covered, and this talk about that “businesses will not be helped,” I think all of that will be proven wrong.

One question is whether the government has fiscal space for such a large package?

Even the sternest of fiscal hawks have stopped asking that question. Yesterday, I had a meeting with leading economists and they were saying that you have (to) look at fiscal space in a dynamic sense. If you get the GDP to grow, the fiscal space gets created.

On the other hand, if the GDP stops growing, then the same fiscal expenditure becomes much bigger (as a percentage of GDP), the ratio (fiscal deficit) becomes much bigger. I think rather than asking this question (on where is the fiscal space), one should ask the question “how is this extra fiscal push being used to accelerate the economy”. My belief is that with the bold reforms, this will help to boost the productive capacity and the productivity of the economy.

Does focus on Atmanirbhar Bharat indicate that we are not keen on foreign investment?

Not at all. He kept saying atmanirbhar but not atmakendrit, we have to be self reliant in a globalised world. He said we will, therefore, work with global value chains and become a better part of it on the basis of our competitiveness.

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