10 Things We Learned From Modi's WSJ Interview About India's Economy And Growth

27/05/2016 10:28 AM IST | Updated 15/07/2016 8:27 AM IST
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India's Prime Minister Narendra Modi attends a meeting with Saudi King Salman in Riyadh, Saudi Arabia April 3, 2016. REUTERS/Saudi Press Agency/Handout via Reuters ATTENTION EDITORS - THIS PICTURE WAS PROVIDED BY A THIRD PARTY. REUTERS IS UNABLE TO INDEPENDENTLY VERIFY THE AUTHENTICITY, CONTENT, LOCATION OR DATE OF THIS IMAGE. FOR EDITORIAL USE ONLY. NOT FOR SALE FOR MARKETING OR ADVERTISING CAMPAIGNS. THIS PICTURE IS DISTRIBUTED EXACTLY AS RECEIVED BY REUTERS, AS A SERVICE TO CLIENTS. NO RESALES. NO ARCHIVE.

On the second anniversary of his taking office, Prime Minister Narendra Modi and his government have been busy highlighting their main achievements while deflecting criticism about the slow pace of economic reforms. In an interview with with The Wall Street Journal on Thursday, he said the government has done “maximum” on the reform front in the last two years, in turn laying the foundation for future reforms. He also said that more reforms have taken place in the last two years as compared to the 10 years before that. Here are 10 things we learnt about the Prime Minister's views on and plans for the Indian economy.

1. Expect GST this year: The proposed Goods and Services Tax, an umbrella tax that will simplify indirect taxes, which has been the subject of much political bickering, now has backing from all the political parties except the Congress.

2. Competitive cooperative federalism: The Prime Minister said the government is trying to introduce “competitive cooperative federalism” to encourage competition among state governments, which in turn should boost overall economic growth.

3. The Three Pillars: He wants to structure the country’s economy around three pillars: agriculture, manufacturing and services -- to help achieve balanced and sustainable growth.

4. Boost entrepreneurship: He envisions a “personal sector,” creating an environment where an individual becomes a “job creator” through entrepreneurship, as opposed to just having public and private sectors. Skills for youth will remain a priority so as to create adequate opportunity for the 800-million strong youth population.

5. On labour reform: He said states with an agricultural base don’t need reform in labour laws, but states with a “substantial manufacturing sector” do need such reforms, adding that this being a joint subject between the Centre and the states, he would allow such reforms to take place.

6.On RBI governor Raghuram Rajan’s reappointment: He said the matter was an “administrative subject” that should not interest the media, and that it will “come up only in September.”

7. On sustainable growth: The Prime Minster made a reference to India’s "sanskriti" or heritage of a less-is-more ethos that would help it steer away from the environmental problems confronting the developed world.

8. On fast economic growth: Modi said that India’s current growth should be “viewed in context,”

adding that for a country like India, “high growth for a few years is not what we need.” “Global experience shows that to transform any country, we need sustainable high growth for 30 years. The reform measures we have taken are only now beginning to take full effect,” he said.

9. On India’s place in the global economic order: He referred to the “paradox” that India did not take advantage of the situation when global growth was consistently high, and now when India’s growth has “taken off,” the global economy is doing badly. He highlighted his government’s focus on “prudent, macro-economic administration," reducing fiscal and current account deficits, while making India a destination for foreign investment, improving ease of doing business and bringing “predictability in taxation.”

10. On fighting poverty: He said the government’s role will be to "help" the poor "jointly fight" poverty, by providing the poor with resources, opportunity and hand-holding.

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