India should resist the temptation of becoming more “inward looking” even as it marches on the path of ‘Aatmanirbharata’ (self-reliance), top economists suggested on Friday.
At an interactive session with Prime Minister Narendra Modi, ahead of the Budget, which is to be presented on February 1, top economists are understood to have pitched against any significant import tariff hikes and even called for import tariff reduction. A case was made for the Government to be deeply committed to pursuing reforms path so as to make the country an attractive trade and investment partner of the world. Suggestions were made on agriculture reforms and macro economic stability, besides financial sector stability through banking sector reforms.
Several of the 16 leading economists who interacted with the Prime Minister suggested that the government must go for an expansionary Budget with a special focus on ramping up outlays on health in the current pandemic times. Most of them said the government should not be unduly worried about fiscal deficit in the current trying times and must take measures to build investor confidence by squarely handling issues such as retrospective taxation, which has sent a bad message to the world. Some also suggested that India should not challenge the international arbitral awards of The Hague.
The economists unanimously stressed the need to increase spend on the ₹110-lakh-crore National Infrastructure Pipeline projects proposed for the next five years.
The government is expected to keep focus on growth, reconstruction and reforms as it prepares to bring the Covid-19 battered economy back on track. There are already signs that the economy will recover strongly in 2021-22 on the back of several rounds of Aatmanirbhar stimulus packages unveiled since the first quarter of this fiscal.
It may be recalled that the government has been maintaining that ‘Aatmanirbharata’ does not mean that India is looking to shut itself out of the world. This is a well thought-out strategy to build global scale manufacturing and competitiveness in select identified industries through new initiatives like production linked incentive (PLI) schemes for which the government expects to spend over ₹2 lakh crore in the next five years.
The leading economists and bankers who attended Friday’s meeting included Rakesh Mohan, Arvind Virmani, Shankar Acharya, KV Kamath, Sonal Verma and Shekhar Shah.