Jagran Forum – Democracy: Challenges of Consensus Building

Delhi Tracks

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Two Economist Speak.    Economics is to serious of a business to be left to Economist.   Two top economist now share their views on this topic:  Coalition Goverment and Rapid Growth

Dr. Basu  (Chief Economic Advisor, Finance Ministry)

Growth is a matter of great interest and great concern in India.   Couple of numbers:

• Last Quarter 2009 – 2010, 8.6% (Estimated), Services Sector would have picked up in the 4^th quarter, Industrial Sector, extremely well
•  Last Year  – G20 Countries, only 3 countries with positive growth:  China, India and Indonesia
• Rapid Turnaround, quite well with respect to global comparison
• Warning Signals
  • Inclusiveness and the poor being drawn in
  • Inflation
    • Escalated from food to other sectors
    • Commodity Prices

• Solutions:  Food Security Bill, Divert growth to the segment that needs it the most
  • Guarantee certain amount of food to poor households: 35 Kg of food per household
    • Not of money but of mechanism
    • Wheat: 67% gets diverted before reaching the needed audience
    • Foldback other subsidies, fiscal deficit does not go out of control
    • The Mechanism is the issue.  We need a more direct method to give the subsidy to the poor
      • Overhaul of the PTS system
      • Cash for Food
    • Cannot take a partisan line, a system in the interest of India.  Don’t want to lose 2/3 of the subsidy to pilferage. Willingness to give and take.

Sujit Bhalla

Solid Growth under the presence of the UPA government (UPA1 and now UPA2).   But cannot point to any single policy that drove this growth.   No-one has been able to come up with a single policy that has helped to drive this growth.   The major phenomena

• Emergence of a Middle Class, has different needs, believes in a level playing field
• Press:  Checks and Balances

Helping the Poor through the Food Security Program

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    • The poor need food.  We will pass a mandate to make a Food Corporation of India and will sell food through the stores.   And if we need fertilizer – let’s give the subsidy to the fertilizer companies.  And the list goes on and on.
    • Food Price inflation of 15 -16%
    • Real Battle to get food to the poor
      • Huge vested interest at keeping policies as they are.  Benefits someone in the decision making circle.  A huge fight
      • “Cash for Food”

China ,  Great Growth – no Coalition Government