Next-Generation Reforms Will Help Transform India Into A Developed Nation: Sanyal

(MENAFN- Live Mint) "New Delhi: Over the next 25 years, India's journey towards becoming a developed economy will involve implementing administrative and judiciary reforms, as well as better intra-city infrastructure, Sanjeev Sanyal, a member of Prime Minister Narendra Modi's Economic Advisory Council, told Mint next-generation reforms will go alongside India's aspirational goal of establishing the rupee as a stable currency over the next decade, helping internalize its usage, besides enhancing its global acceptance as a payment mode, the bureaucracy must keep pace and meet the demands of the 21st century, Sanyal said, adding that the other major area for reforms would be the legal processes.“The Judiciary has to take the lead. Enforcement of contract, delivery of justice, and so on, has to be brought to cater to the 21st century.”\"The third major area is the need to look at intra-city infrastructure after strengthening inter-city infrastructure. We are already doing it in metros, but we need to look at aspects such as waste management, upgrading our public spaces, and heritage conservation,\" he said to Sanyal, aspiring to establish the rupee as a hard currency is not about de-dollarization, but rather about enhancing its global acceptance. \"We should aspire for other countries to keep their forex reserves in our assets like Indian government securities, and to become a part of the International Monetary Fund (IMF)'s special drawing rights (SDR) basket.\"
\"The first obvious step is that we should be seen as a responsible monetary system. For that, we already have a track record for the last eight years of an inflation-targeting framework, which has worked well. We have demonstrated to the world that we can control inflation in a narrow band.\"
\"In the post-covid period, we have done better than most other countries, including developed nations, in terms of controlling inflation. Now we are building out the wider international use of the Indian rupee,\" Sanyal said, the Indian economy, the fastest-growing major economy, soared ahead in the recently concluded December quarter with a surprise growth of 8.4%, higher than even the government estimates also highlighted India's significant growth rate, which prompted the National Statistical Office to revise the gross domestic product (GDP) growth estimates for FY24. GDP growth was revised upwards from 7.3% in the first advance estimates to 7.6% in the second estimates, surpassing forecasts by global multilateral agencies and financial institutions.
“The latest reading of an 8%-plus growth rate exceeds even the government's expectations. It is being driven by several factors, but an important one is investment, both by the government and, increasingly, by the private sector. It is also important to note that this growth performance has happened despite a very difficult external environment for exports.\"
While India's strong performance is supported by factors such as sustained government capital expenditure, healthy corporate performance, and improved corporate and banking-sector balance sheets, global growth has been affected by geopolitical challenges and persistent inflation in developed countries. These factors led to tight monetary conditions, particularly in advanced economies, and have adversely impacted markets and growth worldwide, Sanyal said.“Unfortunately, the external environment continues to be very challenging. Many of our major export markets such as Germany, Japan and the UK are in recession. Monetary conditions are still tight globally, although there are indications that the US Fed will be eased later.”\"Given the overall environment, our growth performance is even better than what the headline numbers suggest,\" he added said while merchandise exports haven't been strong, Indian products have been increasingly gaining market share, especially in electronics, mobile components, and pharmaceuticals. This is a positive sign amid the slowdown in the global market, he added.“I am reasonably confident that should the global economy suddenly grow, we will be disproportionate beneficiaries. Many of the traditional constraints associated with the manufacturing sector have been addressed.”According to Sanyal, infrastructure is no longer a critical constraint, with significant improvements seen in bureaucratic hurdles and red tape. Besides, active schemes such as production-linked incentives (PLI) are bolstering manufacturing, he said.\"The purpose of the PLI scheme is to allow Indian companies to get around its mindset problem, which we had written about in the Economic Survey four years ago. The problem was that India has a large number of companies, but not enough large companies,\" said Sanyal, who was the principal economic adviser to the finance minister for five years till February 2022.“PLI is a one-time ladder, so to speak, to encourage rapid scaling so that our companies can compete in global supply chains. So, you try a bunch of PLI schemes, some of them will work, and others may not. The ones that don't work can either be restructured or replaced by new sectors.”

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