Dr Raman Agrawalla is a noted economist both at home and abroad. A PhD in Economics from the Faculty of Management Studies (FMS), University of Delhi, he has more than two decades of academic and industry experience. Since early 2005, he has been working in the Tata Consultancy Services in various capacities. He has delivered invited lectures and keynotes at many reputed business schools, universities and in national and international forums. He is a Professional Member, American Economic Association. He is also a Life-Member of All India Management Association, Indian Science Congress Association and Indian Econometrics Society. And he is a poet. He is named a “Leading Scientist of the World 2013” by the International Biographical Centre, Cambridge. In an interview to The Pioneer, he spoke to Sugyan Choudhury on the prevailing economic scenario, both local and global.
What’s your view on the current economic scenario both at global and at our national levels?
Worldwide, economies are turning anaemic. Economic growth is slowing down globally. You observe a weakening trend and fragile momentum. Global economic growth in 2019 may be around 2.6%, less than the last year’s by 0.3%.
However, it may increase gradually to 2.8% by 2021 assuming benign global financing conditions and recovery in emerging market and developing economies. These downside risks to global growth are primarily arising out of rising trade barriers and impending trade wars and may be the consequent currency wars, rising government debt and economic slowdowns in major economies.
Indian economy grew by around 7% in FY 2018-19. Throughout the last year, India’s real GDP growth saw a steady decline from 8% in first quarter to 7% in the second, then to 6.6% in the third; and by the fourth quarter, it was 5.8%. So, something drastic and a well-thought out strategy is needed to arrest the falling economic growth. This may require economic impetus and some measures to boost the effective aggregate demand in the economy; at the same time, lubricating the supply side better for better efficiency and productivity and removing the bottlenecks and supply side constraints.
How far is it practical for India to be a $5-trillion economy by 2024-25?
India is currently an economy of around $2.8 trillion. It is the 3rd largest economy in the world in purchasing power parity terms and enjoys an enviable position of the 5th largest economy. Given the slow progress in the global economy; India achieving the target of becoming $5-trillion by 2024-25 sounds challenging but not impossible. It is eminently doable if the plans and programs envisaged for the purpose are carried out in letter and spirit and there are not much adverse tailwinds or headwinds towards the economic growth journey.
India needs to continue to enjoy conducive environment supporting its economic march and there are compliments that need to be adequately harnessed towards taking India to an economy of this size. India needs to grow at around 8% in real terms to be a $5-trillion economy, which entails a nominal growth requirement of 12% assuming a 4% inflation rate. However, it is important to ask ‘so what’ even if we achieve the targeted growth by 2024-25. So what if we become a $5-trillion economy? Will it remove the problems afflicting the economy? Will there be adequate gainful employment opportunities? And accordingly, plans and programmes need to be in place to free India from the critical economic and social problems afflicting it in the Modi 2.0 era itself; simultaneously with efforts to pursue the $5-trillion target vigorously.
Startup India and Standup India are two well-intentioned schemes to make youths self-reliant. The Startup scheme has been extended up to 2025 promising up to Rs 1 crore for entrepreneurs to stand up and create jobs. The scheme has benefited thousand of SC/ST and women entrepreneurs.
However, a detail study is required to analyse the success stories of Startup India so far with a view to implementing it more effectively. The irritants in the startup economic system have been done away with removing the problems associated with the angel tax. Angel investors or risk capital investors like venture debt funds, private equity funds are promised relief from angel tax for startups provided they submit all declarations in time in the digital startup platform.
Further, a sunset clause for the MSME sector to identify the ‘dwarf’ in the sector to bettering allocation and streamlining economic incentives to small industries is a welcome step as suggested in the latest Economic Survey. I think the startup and standup programmes will go a long way to create jobs and drive economic growth.
Though one can feel optimistic in achieving the Modi 2.0 vision of a $5-trillion economy, it’s good to enumerate the risk factors and mitigation strategies. There are concerns of rising debt and some impending factor market reforms getting delayed. There is no point or benefit to follow any other country and models for growth of Indian economy.
East Asian miracle is a thing of the past. And the financial crises of 1997-98 and 2007-08 have exposed the vulnerabilities of so-called miracle economies, tiger economies and developed economies. India needs to fight its battle on its own terms. It needs to activate and run its economic system on multiple engines driven by higher savings, higher investment, improved factor productivities and expanding exports, both manufacturing and services exports; the latter is already performing well. Good that inflation has remained more or less in control. And the Central Government is successfully treading the fiscal gliding path as envisaged and managed to keep the fiscal deficit target of 3.3% GDP in the 2019-2020 Budget.
Also, it is time to harness the benefits that are likely to arise from the great ideas like circular economy, sharing economy, digital economy for the larger benefits of the Indian economy and its stakeholders. Further, our march towards a $5-trillion will be accelerated if we have adequate institutional reforms in place, the notable being improvement in our educational system, legal system and the likes.
Would you tell us on your current literary pursuit? How do you combine both as an economist and as a poet?
I have plans now to bring out two literary titles which are long pending owing to lack of time. I have been approached by publishers in this regard. One is a collection of my poems. Another is a novel project that I conceived a couple of years ago during my enjoyable short stint in Greece, especially meandering in the ruins of Knossos (the largest Bronze Age archaeological site on Crete). This book will herald a new direction in storytelling, both thematically and form-wise, I feel. Due to my interest in enjoying long walks, enjoying the practice of mindfulness, I try to achieve work-life integration.