'Growth has to take place through private investments'

‘We need to further catalyse economic growth and the government needs to increase revenue,’ says G K Agarwal, BJP’s national spokesperson on economic affairs.

Generation of jobs, bringing the unorganised sector into the formal one, agriculture reforms and banks’ bad loans will be the focus of the government after the victory in the recent assembly polls, Gopal Krishna Agarwal, the Bharatiya Janata Party’s spokesperson on economic affairs, tells Archis Mohan.

After the Uttar Pradesh triumph, could one expect the Narendra Modi government to again take up its promise of reforms while continuing to pursue its poor-welfare agenda?

Promoting ‘ease of doing business’ (EODB) is one of the main focus areas. Our pro-poor policies, building of infrastructure and giving benefits to backward classes have been very successful. We have tried to curb corruption and block leakages in social welfare delivery. Benefits are reaching targeted groups.

But, ultimately, if resources are not generated properly, there will be no revenue for the government to spend on social welfare schemes. So, we need to further catalyse economic growth and the government needs to increase revenue.

The digital economy will make more people tax-compliant and have a positive impact on revenue. But, economic growth has to take place through private investments. For this, the government will provide a support system by ensuring EODB.

What would be the big reforms?

According to us, good governance and transparency itself are big-ticket ones. The Modi government has taken numerous steps to increase EODB. Giving of permissions, documentation and registration have been streamlined; Digital India initiatives have contributed.

Second, reforms are being carried out in the agricultural sector. The issue of a better supply chain management and price realisation for agri commodities is sought to be addressed by amending the APMC (Agriculture Produce Market Committee) law.

The issue is complicated because APMCs are under state governments. So, we are moving in the direction of setting up electronic mandis, that will help in better price realisation. We will also popularise the Madhya Pradesh model of warehousing corporation and take steps to create warehousing infrastructure.

Providing jobs was a major plank but job growth has been poor.

Employment is a very important commitment. There is a limit on the number of jobs that can be created in the government sector or even in the private sector. An important route is to support the unorganised sector, which has enormous potential.

There is a false notion that the unorganised sector prefers to be part of the informal economy, to evade taxes. Many there prefer to be in the informal economy because they have problems with compliance, and these mostly boil down to EODB.

Granting of permissions and regulations will be smoothened, so that the segment can grow. There will also be strong hand-holding through research initiatives, marketing support and credit availability.

The banking sector is an area of concern?

It is in big trouble. We have been able to identity many of the non-performing assets (NPAs). They existed in the system before our time but were brushed under the carpet. Our concerted effort over the past two-three years has been to identify the problem and rectify it.

This doesn’t mean NPAs have been written off. Provision has been made to improve the health of banks but recovery is a big issue. The government has taken initiatives on putting in place an insolvency and banking code. Professionals are being appointed. These steps will help banks recover NPAs. 

Banking reforms are on the anvil through ARCs (asset reconstruction companies) and there is also a discussion on the idea of a ‘bad bank’, where these assets can be transferred.

There could be a proper recovery mechanism through a concerted effort and the government is trying its best to improve that.

Photograph: Reuters.