Veteran economist and former Planning Commission Deputy Chairman Montek Singh Ahluwalia has acknowledged the BJP-led NDA government for its role in maintaining continuity in India's economic reforms. While commending the progress, Ahluwalia also highlighted critical areas where he believes India missed significant opportunities, particularly concerning trade policy and disinvestment.
Praise for Policy Continuity
Ahluwalia specifically credited the BJP for advancing reforms initiated by previous administrations. He pointed to the opening of the insurance sector, a policy that faced opposition initially but was implemented under the NDA. Similarly, the Aadhaar project, conceptualized during the UPA government, was not only continued but expanded under Prime Minister Narendra Modi's leadership, evolving into a cornerstone of India's digital infrastructure.
The Goods and Services Tax (GST) was another major structural reform initiated under the UPA and successfully implemented after the BJP secured a majority. Ahluwalia described both Aadhaar and GST as prime examples of policy consistency, even amidst a dynamic democratic landscape.
Missed Opportunities Identified
Despite the praise for continuity, Ahluwalia expressed strong reservations about India's trade policy direction post-2016. He noted a shift towards raising import duties, diverging from an earlier strategy of progressively lowering tariffs to align with East Asian levels. This protectionist turn, he argued, was a negative development.
A significant missed opportunity, according to Ahluwalia, was India's decision to opt out of the Regional Comprehensive Economic Partnership (RCEP). He viewed this as a setback on the international stage, signaling a break in the reform trajectory in crucial areas.
Furthermore, Ahluwalia commented on the Modi government's approach to disinvestment and privatization. While initial signals were strong, even surpassing the UPA's commitment to public sector reform, the actual implementation fell short. He stated that the stated objective of privatizing most public sector undertakings, retaining only a few strategic ones, largely remained unfulfilled, representing another significant missed chance for economic streamlining.
Overall Economic Trajectory
Summing up India's economic journey over the past two decades, Ahluwalia concluded that the country has generally moved in a positive direction but at a leisurely pace. He cautioned that this sporadic growth pattern, characterized by 'stops and starts,' is insufficient to achieve ambitious growth rates of 8% to 10%, likely keeping India's growth confined to 6-6.5% even with global support.