BackEconomy has improved in past 17 months: Modi
The improvement was not by accident but due to well-thought-out reform measures, says the Prime Minister
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New Delhi: Prime Minister Narendra Modi gave himself a pat on the back on Friday saying the improved economic indicators in past 17 months were not by accident but due to well-thought-out reform measures.
“GDP (gross domestic product) growth is up and inflation is down. Foreign investment is up and the current account deficit is down. Revenues are up and interest rates are down. The fiscal deficit is down and the rupee is stable," Modi said while addressing the Delhi Economics Conclave (DEC), organized by the finance ministry. “Obviously, this did not happen by accident," he added.
Listing out the reform measures initiated by his government, Modi said the improved economic scenario is particularly significant because the global economy is not doing well.
“We have embarked on a course of fiscal consolidation. We have entered for the first time into a monetary framework agreement with the Reserve Bank (of India) to curb inflation. Even while cutting the fiscal deficit we have substantially increased productive public investment. We have reduced wasteful expenditure through innovative methods like the use of technology," he said.
Modi said his government is focusing on reforms not to impress groups of experts or grab headlines in financial newspapers, but to make people’s lives better. “We must reform to transform. And reforming to transform is a marathon, not a sprint," he added.
The focus of this year’s conclave was Realising India’s JAM (Jan Dhan-Aadhaar-Mobile) Vision. JAM Trinity was coined by chief economic adviser Arvind Subramanian in this year’s economic survey.
Modi said the JAM vision will serve as the bedrock of many initiatives to come. “For me, JAM is about just achieving maximum. Maximum value for every rupee. Maximum empowerment for our poor. Maximum technology penetration among masses."
Higher economic growth is the best antidote to poverty, finance minister Arun Jaitley said at the conclave. “It not only helps people to pull out of poverty, it also helps the government garner enough resources for poverty alleviation," he said.
“We are passing through a time when private investment is slow. There is significant increase in foreign investment and public investment. Till such time that the entire cycle of private investment picks up, public investment has to take the lead... utilization of JAM trinity helps us in two ways. It helps us in directly transferring resources to those it is meant for. It also helps us in saving large amount of resources, which in turn converts itself into public investment which is helping the Indian economy," he added.
Subramanian said JAM is not just about direct benefit transfer, it is about better targeting of subsidies, reducing leakages and fiscal savings. “It is on one hand better governance and improving state capacity. It is also about providing psychological and emotional self-respect to the poor and social empowerment to bring them into the financial and social mainstream," he said.
Karthik Muralidharan, professor of economics at University of California, said it could be a political mistake to focus on financial savings through the implementation of JAM, which could alienate many who are opposed to the idea. “We need to emphasise much more on beneficiary convenience rather than fiscal savings to begin with," he added.
Amarjeet Sinha, additional secretary in the ministry of rural development, said the biggest obstacle to the process of financial inclusion is last-mile connectivity. “It is an opportunity for technology to leapfrog. But the last-mile challenge both on digital connectivity and the financial ability to disburse at that level need to be speeded up if we want to move in that direction," he added.
Taking a jibe at non-government organizations working in rural areas, Modi referred to them as “poverty alleviation industry". Though their intentions are good, empowering the poor is far more effective than empowering the poverty alleviation industry, he said. “Empowering the poor through financial inclusion and social security will provide a more stable and lasting solution," the Prime Minister added.
Modi said he accepted the recommendations of the 14th Finance Commission, which suggested greater devolution of resources to the states despite “internal advice to the contrary".
He said he has accepted the key recommendations of a sub-committee of chief ministers on sharing of funds for centrally sponsored schemes between the Centre and states in the spirit of cooperative federalism.
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