Dr Arvind Panagariya said he is confident 'viksit Bharat' is an achievable dream.
Prime Minister Narendra Modi "inherited a very fragile economy" - from the preceding Congress-led United Progressive Alliance government - and, while progress has been made to a 'viksit (developed) Bharat', more must be done, Dr Arvind Panagariya, 16th Finance Commission Chairperson, told NDTV.
But assuming these challenges are overcome, that goal - a 'developed' nation, one for which a sustained growth of around 7.6 per cent, till 2047, is seen as a minimum - is "very much doable", he said, pointing to reports that India's GDP is likely to grow at nearly eight per cent for 2024/25.
"We forget, actually, the PM inherited a very fragile economy. In the last two or three years of UPA rule, things had really gone south. This was when some of the worst laws were enacted..." he said, highlighting legislation dealing with the right to education and acquisition of land.
"We had the Right To Education Act, which ended up being more of a barrier to quality education than promoting it, (and) we had the Land Acquisition Act, which clearly made the task of the PM who succeeded the UPA incredibly hard in terms of land being priced very highly," Dr Panagariya said.
He pointed to the cost of acquisition of land, "even in a linear project, such as roads", explaining purchase of land becomes three-fourths of the project's cost. "What that means is... for the same resources, (instead of being able to) construct 2 km of road... you are able to construct only 1 km."
Dr Panagariya also flagged other "fragilities" in the economic and administrative system inherited by Mr Modi, such as environmental clearances for infra projects "in a way hardly any projects were progressing". "So, those bottlenecks had to be cleared up (and) then the PM proceeded to deal with more difficult reforms," he said, pointing to abolition of red tape, GST, and the bankruptcy code.
Looking forward, he identified execution of the four labour codes as a key step, saying, "... we had enacted these in 2019/20... but implementation is still to be done. Once that is done... there is a whole host of reforms to do with income tax, privatisation, and higher education reform."
Attention must also be paid to other infrastructure needs, such as railways and civil aviation and, most importantly, that related to digital payments, Dr Panagariya told NDTV.
Despite these challenges, he said he is confident 'viksit Bharat' is an achievable dream.
"For the last 20 years... if I take 2003/4 to 2022/23, India's GDP growth rate in terms of (current) dollars (is) 10.2 per cent. People do not realise... in dollar terms we have grown very rapidly. Indeed, even if I take out the GDP deflator for that - which is the US GDP deflator, because we are talking in terms of dollars - India's GDP growth rate in real dollars ends up being 7.9 per cent for this period."
