'Doc has right prescription for markets & masses'

NEW DELHI: Prime Minister Manmohan Singh’s message is crystal clear — economic reforms need to be inclusive, bringing rural India to the centre stage of future reforms. And a large part of the reform initiatives, the PM talks about, is to do with bringing farmers into the mainfold.

ET caught up with leading economists and bankers across the country to check out how Doc Manmohan’s prescription for reforms can be executed.

The biggest votary of Manmohanaomics — Montek Singh Ahluwalia — who has been one of the major executors of the reform agenda echoes the PM’s views: “Achieving inclusiveness with fast growth is a big challenge today. That is also the basis of our approach to the 11th plan.

It will involve doubling of the growth rate in the agriculture sector, even while giving priority to development of rural infrastructure, through such programs as Bharat Nirman Yojna.”

Reaffirming the need to introduce structural changes and micro-level initiatives, economists feel that distressed farmers have to be protected today. Says M Govind Rao, director, National Institute of Public Finance & Policy, “While some of the policies like FDI (foreign direct investment) in retail and corporate investment in farming may yield results in the medium term, that will not help the distressed farmer.

In other words, it is not the macro policies, but the micro level interventions that are necessary to deal with distressed farmers.”

Structural changes initiated at this level would lead to social changes as well for at the end of the day, the biggest challenge is all about bridging disparities. Says Russell Parera, CEO, KPMG India, “Whilst the free markets focus on the so-called emerging middle class of 300m, there is clearly a need to also ensure that the poorer section of 600m at the bottom of the pyramid is uplifted in order to manage the social situation. China has a similar challenge in dealing with these disparities.”

But there are some who feel that there is more than what appears in the eye. After all, solving the farmers’ problems is no simple solution and may need a critical assessment of the situation. Says D K Srivastav, director of the Chennai School of Economics: “The Prime Minister’s comments are generalisations without a critical diagnosis of the problems afflicting the farmers.

They do not address the structural issues, including the critical changes which are taking place in the economy. The centre of gravity of the economy is shifting to industry and so it is impossible to think of providing dignity to farmers, without relocating them to new and productive sectors.”

Writing off loans or doling out huge subsidies appear to bail out farmers is only being seen as a short-term measure. “Providing symptomatic relief to sectors which have landed in trouble is something that is done from time to time, that provides no long term benefit.” Instead allowing farmers to become shareholders in corporate initiatives in farming could be a better model.

While some foreign banks look at such policy shifts as an opportunity to increase their presence in India, increasing the penetration levels in the rural belts, others feel that the banks need to do their bit in the national interest.

Says Sanjay Nair, Citigroup India, and Area Head for Citigroup operations in India, Sri Lanka, Bangladesh and Nepal: “We must see how this translates into policy and specific actions.

Though foreign banks like ours have a limited physical presence, we would love to participate in the process through direct lending.”