Banks nationalisation was a sin, says economic advisor

Arvind Subramanian laments lack of reading habits of young generation

yoshika

Yoshika Sangal | July 21, 2015


#Banks nationalization   #Arvind Subramanian   #national banks   #banks   #banking news  

Terming the nationalisation of banks in the 1960’s as one of the ‘biggest economic sins’ in the history of India, chief economic advisor, Arvind Subramanian called for establishment of more banks. He was speaking at a talk organized by ‘Ideas for India’, an economics and policy portal.

 Subramanian and professor Karthik Muralidharan of University of California spoke on the various economic issues and development policies at India International Centre on Monday evening.

According to him recapitalisation strategies for banks should differentiate among the banks and the sources of finances should be diversified whether they are many banks or types of banks. He also said there is a need for increasing licensing.

He proposed that there should be better bankruptcy laws and creative quasi-political exits mechanisms in banking.

Calling the path of progress a precocious developmental model of the Indian economy, Subramanian said that India is trying to grow and develop by defining its comparative advantage of under-supplied skilled labour than the majority of unskilled ones.

Usually a country’s last stage of development are meant to get capital labour technology and export labour intensive goods, yet it is striking that India has already been exporting a lot of FDI and is doing things at levels of development and income much earlier than other countries and this unique model could be a one that other countries will eventually follow”, he added.

“I strongly believe that institutional development, taxation and fiscal contract between citizens and the government is very important for accountability as the number of tax payers to voters in the economy has been four per cent for very long”, he said while explaining the precocious political model of the country.

“A major challenge for India is that it started as socialism with restricted entry to capitalism without exit. Be it fertiliser, power, banks, public-private partnership projects, civil aviation or even agriculture of rice and sugar, one cannot get out of inefficient production. Also, the export outcome has come down exponentially, yet I am hopeful that increasing demand for education, sights of good economics becoming good politics combined with competitive federalism and reforms like goods and services tax (GST) and jandhan aadhar mobile (JAM) would be agents to an endogenous change in the country”.

On being asked by Muralidharan about investments in infrastructure development, the CEA pointed out that in the latest budget there would be no constraint on spending on public investment but the concern is to spend it judiciously during the short-run.

“It is pivotal to understand ‘how to spend’ and all components of expenditure should be focused with outcomes,” he said.

He felt that “there should be one or two universities of think-tanks in every state that will do essential assessment of the quality of expenditure. If one knows the value of money or lack of value of money then it would be an important input into the first level of decision of what gets financed.”

An event attended mostly attended by students and teachers of economics, Subramanian said that the young generation does not read enough. He quoted German economist Rudi Dornbusch’s advice to American economist Paul Krugman, “just read the Financial Times every day and that will give you an idea on what to research.”

“In order to understand development you need to read economics as well as history, political theory, political science and fiction. The scope of academic work is huge “he added.

Comments

 

Other News

“Script is the real hero”

Basking in the success of the new web series, ‘Scam 1992: The Harshad  Mehta Story ’,on SonyLIV, the OTT platform from Sony stable where the lead actors are new faces, NP Singh, MD and CEO of Sony Pictures Networks, has said that the script is the new hero. He credited the s

India’s active cases below 10% of total cases for three days

India’s trend of steadily decreasing active cases continues unabated. The number of Active Cases has remained below 10% of the total cases for the last three days, suggesting only one in 10 cases is active Covid-19 patient. The active cases comprise merely 9.29% of the total positive c

Cabinet clears bonus for non-gazetted employees

The union cabinet chaired by prime minister Narendra Modi on Wednesday gave its approval to pay productivity linked bonus (PLB) for 2019-20 to 16.97 lakh non-gazetted employees of commercial establishments like Railways, Posts, Defence, EPFO, and ESIC, with a financial implication of Rs.2,791 crore.

Covid-19: Daily new cases fall below 50K

India has leaped across several significant milestones in its fight against Covid-19. The new confirmed cases in the 24 hours to Tuesday morning have fallen below 50,000 (46,790, to be precise) for the first time in nearly three months. The last time the number of new cases was close to this level was on J

Media taking advantage of a divided Bollywood: Shatrughan Sinha

Legendary film star and politician Shatrughan Sinha has said that friendship in Bollywood is limited to onscreen, and there is no unity and some news channels are taking advantage of this situation. “Groups within the industry or their supporters may sometimes come together for some c

‘2.40 lakh TB cases went unreported in India in 2019’

In India, only 2.40 million out of an estimated 2.64 million cases of tuberculosis were reported to the government, that is, 2,40,000 TB patients went unreported, in 2019, according to the WHO Global Tuberculosis Report 2020. The reporting of TB cases, however, has significantly increased ov

Archives

Current Issue

Opinion

Facebook    Twitter    Google Plus    Linkedin    Subscribe Newsletter

Twitter