In an interview to The Wire, Montek Singh Ahluwalia, former deputy chairman of the Planning Commission of India, said the narrative around the farmers’ protests had spun out of control for the government.
Ahluwalia said that while issues like reducing commodities from the purview of the Essential Commodities Act was something even the Planning Commission had recommended in 2011, it pointed to extremely poor timing to have pushed through the Acts during the COVID-19 crisis. States needed to be allowed to decide crucial issues of farming, he said. The former deputy chairman of the Planning Commission of India also said it was wrong to use a parliamentary majority as a tool of brute force.
Ahluwalia said Punjab needed to gradually move away from minimum support price-based wheat and rice to high-value crops, but decisions around agriculture should be left within the ambit of states.
On the economy, he said India cannot assume it will automatically reset to 7-8% growth. India needs strong policy changes in order to ensure growth picks up at a sustainable pace, from the small signs we are now beginning to see.
While there is a wave of interest and liquidity towards all Asian nations, it is also true that the pandemic had not been ‘uniform’ in the decline it had caused, Ahluwalia said. For many, jobs and businesses have been permanently lost and this runs the risk of a much wider gap between those at the bottom of the economic pyramid and those above.
Ahluwalia said a key imperative for rebuilding the economy would be clarity about the real situation around the fiscal deficit – something consecutive governments have not been candid about. Admitting that the fiscal deficit had widened considerably due to the pandemic, with the assurance that all efforts will be to close the deficit through borrowing, will send a strong signal to global financial organisations.
He said the current fiscal deficit (Centre and states) was most likely in the range of 12% to 14%.
Ahluwalia also said India not becoming a part of RCEP was very disappointing. The weakness of trade policy showed up in not integrating with others and instead creating more protectionism. India had missed a crucial opportunity to be part of a regional trade pact where it could have made rules, he said. Stepping away from the pact showed India’s actions were not consistent with its talk around opening up of policy around trade.