, 15 tweets, 8 min read Read on Twitter
Anybody interested in #India's #Economy should take 30 minutes time out and listen to this interview. There is both sound, credible analysis of the problem AND an entirely logical policy prescription. #AltSarkar @PIB_Altsarkar @fek_le @Vidyut
A quick summary:
1. Our present problems can be traced back directly to the stupid, stupid move on Nov 8 2016 when 86% of the means of settlement of dues was taken out. Damn that #Demonetisation. We in #AltSarkar have to acknowledge it even if its defenders do not.
2. India's problem is a demand side problem. People have neither the free disposable cash now nor the confidence in their future to take a loan to go out and buy stuff.
3. You don't deal with a demand drop off by propping up supply side factors. #AltSarkar believes in logic
4. We need to stimulate demand. Old fashioned Keynsian economics. When private players are reluctant to spend or borrow, it is time for the Government to step in and kick-start the engine of growth.
5. But what about the #fiscaldeficit? I hear you ask me in #AltSarkar's FinMin
6. Well what about it. It's now said to be around 3.6% or so. But that's the headline one. the real fiscal deficit (i.e when the liabilities of the Govt that are off balance sheet are added in) is an eye-watering 7 or even 8%.
7. I was pleased to hear Pronab Sen sound relaxed about letting the headline fiscal deficit rise a bit say to even 4 or 4.2% but with a clear plan to bring it back into line below 3.5% by the end of the economic cycle.
8. Key, Key Q. What should this be spent on?
9. Here Pronab Sen's ideas have great appeal. The problem that #NoteBandi caused was in the informal and rural sectors that is where demand fell off the edge. That is where the stimulus should go. So:
9a. 10. Rural roads, culverts, water collection and storage facilities, schools, clinics and community facilities. Rather than six-lane highways, and airports. That's where jobs will be created, wages improved and spending pick up.
10. GST reforms. Urgently needed, Rather than tinker with rates, I would simplify the bureacratic bottlenecks and problems. Self assessment and quarterly return for all except the largest businesses. Government procedures must serve business not the other way round
11. On exports, #AltSarkar would take the bold step of de-linking the strength of the rupee with any sense of national pride. A strong rupee is bad for exports; if we want a trillion dollars worth of exports then a weaker rupee is fine. I would work with #AltSarkar_RBI on this.
12. #AltSarkar would pay heed to my earliest announcement in my acceptance speech (see my pinned tweet) that we build a prsperous nation by ensuring that the bottom 20% of people prosper, not the other way round. So I would still steer Govt spending towards health and education.
13. At the present time the Global economy is in trouble: #USChinaTradeSpat, #BrexitChaos, #IranSanctions. But as Pronab Sen argues, sooner or later the world economis cycle will turn up and India needs to be equipped to leverage our potential.
14. So short-term - Rural stimulus, jobs spending infrastructure building with a Keynesian stimulus even if it means a small rise in #FiscalDeficit.
Medium-term - education, health spending, skills to prepare for a recovery. #AltSarkar
15 Sounds simple, doesn't it. Actually its very hard, it'll take hard work and constancy of purpose. No diversion of focus on silly things like statues, or dangerously stupid things like One Nation One Language (Our export markets don't give a rat's arse about it) #AltSarkar
16. If anyone can do it #India can, We didn't just NOT go under when the World economy went into a spasm in the 2008 sub-prime mortgage fiasco. We came out of it and grew handsomely, until #NoteBandi. #AltSarkar recognises the problem. AltSarkar can fix it.
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