India needs its own model of capitalism, says NITI Aayog's Rajiv Kumar

NITI Aayog Vice-Chiarman Rajiv Kumar
India should not adopt the off-the-beaten-path model of capitalist development and evolve its own model taking into account its strengths in innovation, entrepreneurship and large domestic markets, said Rajiv Kumar, vice-chairman, NITI Aayog. 

This could be achieved through seven key elements, including the government's commitment towards reforms, such as implementation of the goods and services (GST) Act, where the government has not done badly though some tweaking may be required.

“The experience in other countries has been that it takes two years for the new system to stabilise. We have not done too badly though some more tweaking may be required,” he said, adding that it would expand the indirect tax base by bringing in a 56.9 million business units in the country under the tax net. He was speaking suring the 55th convocation ceremony of the Indian Institute of Technology, Madras (IIT-M).

The other elements include tackling inequality, which is a clear priority, democratisation of entrepreneurship through schemes like Mudra and Start Up India and focus on frugal innovation and digitisation where India has the highest mobile data consumption of 1.3 billion GB per month with tariffs falling 93 per cent (from Rs 269 per GB in 2014 to around Rs 19 per GB in September 2017).

Reduction in tariff has benefitted 1.2 billion subscribers (682 million urban and 524 million rural) who on an average spend Rs 108 per month for telecom services. Average mobile data use per subscriber increased 25 times from 62 MB in 2014 to 1.6 GB per month.

Increasing private sector involvement in social sectors such as health, education, nutrition and sanitation, corporate social responsibility and service-led growth are other elements of the Indian model of capitalism, he added.

“At the same time, it will have to address our weaknesses of fragmented land holdings, water stress, malnourishment, and a marked degree of dualism and informality in the economy and society,” he said. 

Mistrust among the principle stakeholders, the government, industry and academia are also key issues that need to be addressed, he said. 

The country also needs to get rid of crony capitalism and that has been the effort of the present government, he added.

The country is well on its way to achieve an economic transition which will increase the per capita income from about $1,900 in 2017-18 to over $10,000 in 2047.

“We have already been successfull in advancing our social and political transitions. Our economic transition when completed will see per capita incomes rising from about $1,900 in 2017-18 to around $ 3,000 in 2022-23, and then hopefully to over $10,000 in 2047, when we celebrate the centenary of our independence,” he said.

Prime Minister Narendra Modi's approach for persistent efforts at enforcing discipline and accountability may appear incremental but will have large cumulative impact.

“There are persistent calls for major and large scale administrative reforms. The recommendation is to change everything in the shortest term. This is simply impractical – even dangerous – as it could result in unmanageable turbulence,” he added.

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