India Transformed: 25 Years of Economic Reforms
Asia Society India Centre in collaboration with Brookings India welcomed Rakesh Mohan, former Deputy Governor of the RBI, to speak about his new book “India Transformed: 25 Years of Economic Reforms” in Mumbai. Joining him in conversation were Anand Mahindra, Chairman and Managing Director of Mahindra Group, Chanda Kochhar, Managing Director and Chief Executive Officer, ICICI bank, and Viral Acharya, current Deputy Governor of the RBI.
Mohan launched the discussion by speaking about the inspiration behind the book and what it sought to answer – namely, what were the expectations from the reforms and what were the achievements. Although India was not able to reach a growth rate of 7% (only seven countries have achieved this over the last 25 years), the reforms have no doubt accelerated growth. Elaborating on the thinking behind the policy, Mohan mentioned that a unique feature of Indian economic strategy has been the continuity in policy across several administrations, citing the Goods and Service Tax as an example, which is a result of 35 years of thinking and was conceived during L.K. Jha’s tenure as Governor of the RBI.
The discussion opened to the other panellists as they described how the reforms had impacted their respective sectors and what they predicted going forward. Mahindra said that domestic investment in manufacturing had lagged in the years after the 2008 recession, but predicted a manufacturing boom within the next five. Future growth will be driven by small and medium sized enterprises (SMEs), which until now have been discouraged from growing and achieving scale. These disincentives must be removed and more focus must be given to business management and skill development. Kochhar described how the reforms had allowed banks to become financial service conglomerates, as the opening up of the economy led to the creation of insurance sector, broking businesses and the private equity market. She stressed the need to move beyond employment generation to livelihood creation as a new goal, as well as the need to shift the focus away from “hard infrastructure” towards “soft infrastructure” such as electricity consumption and waste management. Rural areas must also not be left out of the growth story. Using a sports analogy, Acharya compared the RBI’s role in driving growth to the steady and consistent Rahul Dravid, holding fort, rather than Virender Sehwag. He also cautioned against striving to achieve a growth rate of 9-10%, saying that such a rate is not sustainable in the long term. Instead, Acharya stressed the importance of making the economy structurally sound to ensure sustainable growth in the long run.
The discussion was followed by a speech by Shri Piyush Goyal, Minister of State with Independent Charge for Power, Coal, New & Renewable Energy and Mines, who recounted the journey of the last 25 years, including the hurdles that administrations faced such as inflation, policy paralysis, fiscal deficit, and corruption. He concluded his speech by outlining some of the goals of the Modi government, chief among them being creating a framework for honesty and rooting out corruption.