Structural reforms to facilitate growth: CEA Arvind Subramanian

Chief economic adviser Arvind Subramanian says structural reforms to facilitate exit and improve fiscal relations with the poor and the rich are the two big themes of the Survey. Excerpts from a media interaction on Friday:

On survey I am happy to say that this is the first rainbow Survey and by that I mean this is literally first multi-coloured document. This Survey is somewhat ambitious. This has been done without any bad intent...but I will say if haven’t tread on toes we would not have done a good job. I think in the end the survey is about producing challenging analysis and ideas.

On GST I think the GST is a temporary setback we are very much hoping that it will be retrievable.

On fiscal target There are very good arguments for a strategy of aggressive fiscal consolidation, as earlier envisaged, and equally good arguments for a strategy of moderate consolidation that can place the debt on a sustainable path while avoiding imparting a major negative demand shock to a still-fragile recovery. The Union Budget will carefully assess these options.

On imminent challenges One of the most critical short-term challenges confronting India is the TBS problem – the impaired financial positions of the PSBs and some large corporate houses – characterised as the Balance Sheet Syndrome with Indian characteristics

On monetary policy There is scope for easing monetary policy in two ways, one is to inject liquidity to bring it in line with the current policy rate and second is given our inflation projections and assessment going forward perhaps there is more scope for easing the policy rates as well.

On global economy World economy is becoming increasingly grim. The world economy is like a fairy tale – Grim! There is a unique cocktail of pervasive vulnerabilities around the world. We must recalibrate expectations about India’s performance.