Rajya Sabha member and former civil servant NK Singh has worked with all finance ministers since the economic reforms of 1991. Amid the slugfest over the economy, Singh spoke to Sidhartha about the government’s economic policy.
There are concerns over the macro-economic situation. How do you view it?
The current debate on the state of the economy has acquired unexpected fervour. We seem to be moving far too quickly from exalted euphoria to despondency . We seem to forget that quarterly GDP numbers must be viewed in totality in long-term secular trends and that does not support this feeling of failure and despondency .If you look at a few key changes, then you see this government’s record at macro-management is something which must fill everyone with great credit. The PM and the FM have not been tempted to adopt a populist route in adopting policies, which would immediately enhance consumption and demand through giveaways at the expense of macroeconomic stability. The second big achievement of this government is to take the bull by its horns on some endemic problems. The problem of high NPAs was inherited by this government. A very audacious step has been taken on enacting the Insolvency Code and empowering the RBI to move towards closure.
There are a lot of concerns about GST, especially the way it’s been implemented.
There is no doubt that the concept of GST has seen successive governments. The enactment of a firm GST law required enormous ability of persuasion, negotiation and reaching consensus. The FM has repeatedly said there is scope of further rationalisation of GST rates and also indicated that it would be his endeavour to enlarge the reach to cover real estate and petroleum. It looks as though the FM’s success on GST has become his enemy because an easier option for him would have been to indulge in much greater negotiation over a much longer period of time.
If things are going smoothly, why are two of your former bosses, P Chidambaram and Yashwant Sinha, so critical of the government’s handling of the economy?
Mr Chidambaram was very keen on GST but one of the factors that prompted BJP to take the kind of line in not wanting to be supportive was the key role that Mr Yashwant Sinha played at that time in many key decisions. It is somewhat ironic that there is confluence of views among individuals who were on two diametrically opposite sides. Since I have worked with both, it is no secret that there is not much love lost between the two. Considering that GST has at last taken off, it shouldn’t appear to people who are outsiders that it could be sour grapes. Would they not have wished that GST would have taken place during their tenure? I don’t think Mr Jaitley is naive enough to believe that this is the best GST that the country could secure. He grasped the opportunity realising that if the moment slipped, history may or may not give you another opportunity to do so in a reasonable timeframe.The audacity of the FM and acting with panache, coupled with his fabled negotiating skills, resulted in this favourable outcome.
There is talk of a stimulus package. Having chaired the committee to review the fiscal responsibility law, do you think there is scope to deviate from the fiscal consolidation plan?
This government has stood for fiscal rectitude and has shown exemplary commitment to a programme of fiscal consolidation. In my report, there is mention of exceptions and trigger clauses where a flexibility of 0.5% of GDP, which will be Rs 75,00080,000 crore currently , can be used by the government if certain conditions are met. One of this can be far-reaching structural reforms with unintended revenue consequences, or the collapse of GDP and acts of war and collapse of agriculture. It has also suggested a Fiscal Council, which will be an advisory body , to firewall the process.
(This article was originally published in The Times of India)