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

Unlocking India’s women workforce potential

Unlocking India’s women workforce potential Checks and Balances: Geetanjali Minhas discusses challenges in breaking the glass ceiling with three achievers Women, Gender, judiciary, politics, business, law Even though half of India’s population is mad

Pahalgam and after: Is India preparing to hit Pakistan hard?

India, boiling in anger after the brutal killing of 26 tourists in Pahalgam in Jammu and Kashmir by terrorists belonging to `The Resistance Front` (TRF), an offshoot of the Pakistan-based Lashkar-e-Taiba, is preparing for a major offensive against the perpetrators and their handlers across the border. A st

After Pahalgam: “All forces to maintain high vigil”

Recognizing the seriousness of the Pahalgam terrorist attack this week, India has sent out a strong signal to Pakistan to stop supporting cross-border tourism by taking a number of steps including suspending the Indus Water Treaty. The Cabinet Committee on Security (CCS), which is chaired by

How Ayurveda and Yoga can help heal common ailments

Healing Revolution: Defeat 100 Ailments with Ayurveda, Yoga and Lifestyle By Ram K. Sharma Rupa Books, 272 pages, Rs 395

Green cities: A pathway to sustainability

As the world observes Earth Day on April 22, the imperative for sustainable urban development has never been more pressing. Urban areas contribute approximately 70% of global greenhouse gas (GHG) emissions (UN-Habitat Report, 2023). In India, the urban population is projected to reach 800 million by 2050 (

A unique way of looking at nature, at people, at life itself

Another Day in Landour: Looking Out from My Window By Ruskin Bond HarperCollins, 220 pages, Rs 399 Landour is a q

Visionary Talk: Amitabh Gupta, Pune Police Commissioner with Kailashnath Adhikari, MD, Governance Now



Archives

Current Issue

Opinion

Facebook Twitter Google Plus Linkedin Subscribe Newsletter

Twitter