Reviving Growth: Delhi Economics Conclave
- Part 1 -

Prof E. Bijoykumar Singh *

This was the theme of an international seminar held during 14-15 December 2012 at Hotel Taj Palace at New Delhi jointly hosted by the Confederation of Indian Industry, National Institute of Public Finance and policy and Ministry of Finance, Government of India under the brand name Delhi Economics Conclave.

Two earlier editions were held in 2010 and 2011. Besides these two days, satellite conferences were also organised in other places including the Indian Institute of Foreign trade and the Delhi School of Economics over one week.

I was among the academicians invited by NIPFP and because of my health I chose this over the XIVth North Eastern Economic Association conference in Sibsagar, Assam and a trip to Mandalay, Myanmar with Manipur Chamber of Commerce and Industry. It was indeed a hard choice as I was a regular in every NEEA conference and I had been waiting for an opportunity to see Mandalay first hand. Both would have involved long bus rides and I was not confident of my ability to bear it. It was indeed a difficult choice. I planned to combine this with an appointment with my physician.

The prominent speakers in the first two days of that conclave were
P. Chidambaram, Finance Minister, India;
Ananda Sharma, Minister of Commerce and Industry, Textiles, India;
Tharman Shanmugaratnam, Finance Minister, Singapore;
Pravin J. Gordhan, Finance Minister, South Africa;
Sarath Amunugama, Deputy Minister of Finance & Planning, Sri Lanka;
Martin Feldstein, Harvard University;
Jacob A. Frenkel, JP Morgan Chase International;
Changyong Rhee, Chief Economist, Asian Development Bank;
Avinash Dixit, Princeton University;
Arvind Panagariya, Columbia University;
Nick Bloom, Stanford University;
Jaideep Prabhu, Cambridge University;
Markus Brunnermeier, Princeton University and
Sunil Khilnani, King's College, London.

The session Chairmen included
C. Rangarajan, Economic advisory Council to Prime Minister, India;
Bimal Jalan, former Governor RBI;
Y.V. Reddy, former Governor RBI;
M. Govinda Rao, Director, NIPFP;
Kaushik Basu, Chief Economist, World Bank;
Nandan Nilekani, Chairman, UIDAI and
Raghuram Rajan, Chief Economic Adviser, Ministry Of Finance.

There were prominent industrialists such as Adi Godrej, Sunil Kant Munjal of Hero Corporate service Ltd and bankers such as M. Narendra, Indian Overseas Bank; Vladislav Voitsekhovich, CEO, SBER Bank, Russia; T.C.A. Ranganathan, EXIM Bank; Uday Kotak , Kotak Mahindra Bank Ltd; Diwakar Gupta, SBI; K. Venkatesh, Larsen & Toubro; R.V. Verma, National Housing Bank; Venkat Chary, MCX-SX and K.V. Kamath, ICICI Bank Ltd.

A complete list would exhaust my space. On both days the halls in the Taj Palace were packed. The participants also included sixty students from Delhi School of Economics led by the head of department Prof. Pami Dua who turned out to be one year junior to me in Delhi school. The programme also was equally packed. The first day had three invited lectures and three panel discussions with ten panellists. The day ended with Amritasya Putra, a cultural programme presented by Mamata Shankar & Troupe. In this three part write-up, I shall try to report on what transpired in the conclave and what we can learn from it.

In the welcome address of the inaugural session, Raghuram Rajan, our CEA stressed the importance of sustainability in our growth. Our hope to join the club of economies with double digit growth rates had been put on hold as our growth rate slipped from 9% to 6%. There is a slow down globally.

As India has become more globally integrated , besides our own domestic policies what happens across the world has also impacting us more than ever before. We have a vibrant aspirational population whose demand was growing and also becoming more complex. We talk about demographic dividend. There is also the mass of people below the poverty line whose demands are simple and basic. These challenges confronting us have to be met in the context of a rapidly integrating global market.

The seminar warmed up with a speech by Shri Chidambaram, our Finance minister where he listed the series of reforms initiated by the UPA government trying to change its image such as multi brand retail FDI, direct cash transfer, land acquisition bill and cabinet investment committee. With the industrialists applauding him all the way, he promised more such industry friendly reforms in the near future. India had always been accused for going too slow on reforms.

There is a school of thought which argues that it is not because of economic reforms that we are faltering but because of the fact that we are going to slow, we can do better with more reforms. He said that growth had slowed down in both developed and developing economies. There was no room for complacency. We have to build the infrastructure and seek sources of long term capital to finance them.He hoped that ADB would play a more proactive role in regional infrastructure financing.

The issue of inter generational equity was emphasised by Shanmugaratnam in his opening plenary lecture on "Rebuilding Global Growth" He talked about highly successful process of urbanisation in Singapore. The immediate challenge was to revive private investment everywhere. Baby boom and growing female participation have increased the labour force substantially.

There is a need for catching up in productivity.He argued that the interests of the future generations should not be compromised in the relentless search of the current generation of solutions of current problems. He called for right balance between short run and long run reforms.

Talking about the tremendous opportunities for catching up he pointed to increasing marketization of financial markets and giving serious thought on corruption in China. Mismatch between skills and needs of the market should be minimised to the extent possible. The current focus on general academic skills may lead to an imbalance. We need vocational and specialised training and Customisation of post secondary training.

What we focus on is more important than the amount allocated. What we need to focus on for rebuilding global growth are pre-school education, teacher training and using IT to improve access. The components of structural reforms are labour market reform, pension reform and removing barriers to competition.

Greater certainty in policy reduced the cost related with uncertainty within Europe, USA and emerging economies. We should never underestimate cost of uncertainty. In China the issue is over investment and the challenge is efficient use of resources and meeting the labour shortage in coastal areas.

In India and South East Asia the problems are rapid labour force growth and under investment. Supply side reformstackling corruption and accountability would play an important role. Spending priorities should be infrastructure and investment in schooling. This will bring sustainable growth within reach.

To be Contd ...