Economic Challenges for the New Government: Suggestions for Policy Formulations

    The Observer Research Foundation held a series of internal parleys and prepared a discussion paper outlining the core challenges that the new government would need to respond to on the economic front on an urgent basis. This paper was then circulated amongst and discussed with India's finest economic minds on June 1, 2009, at a closed door roundtable, to allow for free and frank debate. The participants included Dr. Rakesh Mohan, Former Dy. Governor Reserve Bank of India, Dr. Saumitra Chaudhury, Member, Planning Commission, Dr. B.B. Bhattacharya, Vice Chancellor, Jawaharlal Nehru University, Dr. S. Narayan, Former Economic Advisor to the Prime Minister, Dr. N.K. Singh, Member of Parliament, Dr. Jagdish Shettigar, Economist and Dr. Charan Wadhva, Economist. Dr Arjun Sengupta, Member of Parliament, chaired the roundtable. The internal discussions and suggestions received at this roundtable meeting form the basis of the recommendations contained in this paper.

    Since 1991, the Observer Research Foundation has assisted and participated in India’s progress towards Economic Reforms by providing a non-partisan intellectual space for free, frank and wide ranging discussions amongst economists of various hues. It has attempted to provide alternatives to the political leadership in policy formulation. The “Agenda for Economic Reforms” published by the ORF in 1991, was one such document prepared by four of India’s brightest minds. We believe it played a key role in catalysing the political will for undertaking reforms, the beneficial results of which are witnessed today. Albeit at its own measured pace, the Indian economy has traveled a vast distance in the past 18 years. Today, India is a fine example of transformational reforms in the developing world and is recognized as an important driver for the recovery of the world from an unprecedented global economic downturn not experienced since the Great Depression of the 1930s. The Indian Economy, though less affected has not been immune from the adverse effects of the global financial crisis and the ensuing economic slowdown.

    These difficult times undoubtedly pose serious challenges, but at the same time offer vast opportunities. The needs of the times and the consequent policy responses to them would have to be very different from those crafted in 1991 in response to our own economic crisis. Today, we would need to discover ways to maintain the growth momentum, while simultaneously expanding its inclusiveness in order to benefit the weaker sections of the society. At the same time , we need to maintain fiscal prudence in the face of the currently justifiable need for yet another fiscal stimulus. All these are easier said than delivered, particularly in the current circumstances where government revenues are strained due to slowing growth rate.

    The Observer Research Foundation held a series of internal discussions and prepared a discussion paper outlining the core challenges that the new government would need to respond to on an urgent basis. This paper was then circulated amongst and discussed with India’s finest economic minds on June 1, 2009, at a closed door roundtable, to allow for free and frank debate. The participants included Dr. Rakesh Mohan, Dr. Saumitra Chaudhury, Dr. B.B. Bhattacharya, Dr. S. Narayan, Dr. N.K. Singh, Dr. Jagdish Shettigar and Dr. Charan Wadhva. Dr Arjun Sengupta chaired the roundtable . The internal ponderings and suggestions received at this roundta ble meeting form the basis of the suggestions and recommendations contained in this paper.