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"PSUs not to be excluded from buying bad assets"

In May 2016, the Prime Minister's Office (PMO) asked the government's top think tank, National Institution for Transforming India (NITI) Aayog, to prepare three documents - a 15-year vision document, a seven-year strategy, and a three-year action agenda.
twitter-logoJoe C Mathew and twitter-logoRajeev Dubey    New Delhi     Print Edition: June 18, 2017
Psus not to be excluded from buying bad assets

In May 2016, the Prime Minister's Office (PMO) asked the government's top think tank, National Institution for Transforming India (NITI) Aayog, to prepare three documents - a 15-year vision document, a seven-year strategy, and a three-year action agenda. A year later, it is ready with the last document in the list, the action agenda. In an exclusive interview with Business Today's Joe C. Mathew and Rajeev Dubey, NITI Aayog's Vice Chairman Arvind Panagariya gives the details. Edited excerpts:

What is the response to the draft action agenda?

I couldn't be more pleased. The feedback has been very positive.

What about the criticism levelled against genetically modified (GM) crops and pricing freedom for seeds?

When the task force on agricultural development was preparing its report, we held extensive consultations with scientists, farmers and activists. We were persuaded by the scientists' views and suggested we should give our homegrown varieties a chance, with appropriate safeguards, of course.

Do you think rich farmers should be taxed?

In the current milieu, it sends a very negative signal. Right now, we are more concerned about doubling farmers' income and ensuring food security. In that context, talking about taxing farmers' income is a bit out of place.

When do you expect the action agenda to be finalised?

There is no specific deadline, but we want to finalise it as soon as we can. At the end of the Governing Council's meeting, Prime Minister Narendra Modi invited the states to send additional feedback within the next few days. Then I wrote to the Chief Ministers and sought more comments. When we have these comments, we will revise the Action Agenda and submit the final draft to the Prime Minister.

In the document, we did not see the concept of universal basic income (UBI), which was prominently mentioned in the Economic Survey. Is it not an idea worth discussing?

I have long argued in favour of giving beneficiaries [of government schemes] the option to choose between 'in-kind' and cash transfers. But I have done so in the context of targeted schemes. The UBI is about providing a basic income to ALL. It must cover even the billionaires. But we simply do not have the fiscal resources. Even if you give just Rs1,000 per month per person, we will need Rs15 lakh crore annually to cover 125 crore people. This is more than three-fourth of the central government budget.

Let us look at the National Health Policy. It talks about a steep increase in public expenditure, but to do that, an annual increase of at least 20 per cent for the next six-seven years will be required. Is your projection in sync with the Ministry's standalone document?

We have only considered the central budget for the next three years. And we are generally conservative in our revenue estimates. If the government's revenue for 2015/16 is roughly Rs20 lakh crore, it should be Rs27 lakh crore in nominal terms by 2019/20. That gives you an extra Rs7 lakh crore and that is the money we are using to reorient the expenditure composition. We have tried to move that additional money to sectors such as health, agriculture, rural development and infrastructure. This allows us to increase the central government's expenditure on health from Rs30,000 crore in 2015/16 to Rs1 lakh crore in 2019/20. Therefore, our estimate goes a little farther than what the National Health Policy envisages.

Did you also recommend that public sector undertakings (PSUs) buy bad assets?

No, we didn't. But in principle, there is no reason why we should exclude PSUs from buying those assets. They can play a key role in ensuring that collusion among private buyers does not result in asset undervaluation. But in the longer run, we must continue with strategic disinvestment.

You have submitted a disinvestment plan for PSUs. Has the government considered it seriously?

The strategic sales that we have recommended will happen.

What will be the suggestions for the 15-year vision and the seven-year strategy?

We have a tough task here. Over a three-year horizon, you have a better handle on what is likely to happen and what the constraints are. Given the pace of technological change and the rapid geopolitical shifts, changes over a 15-year period are a lot more difficult to predict. We need to figure out where we will be in 15 years in terms of per capita income, health, education, employment, urbanisation and other such variables. The seven-year strategy can be more concrete. After three years, there will be an appraisal and at that point, we can reassess whether the original seven-year strategy should be rejigged.

Will there be an annual review of the three-year agenda?

I am sure the PM will ask at some point what we are supposed to implement and what we have actually implemented.

@joecmathew and @rajeevdubey

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