Ahluwalia, who served as one of India's senior economic policymakers for three decades, makes these observations in his latest book "Backstage: The Story behind India's High Growth Years" which traverses the politics, personalities, events and crises in the country's recent history.
He asserts that there is an urgent need to create an environment of social harmony.
"To create an environment conducive to the revival of investment it is necessary for the government to hear these voices and bring a healing touch. The need to create an environment of social harmony and peace is also vital for the survival of the idea of India," he says.
According to Ahluwalia, authoritarian systems can afford to suppress dissent with little effect on investment because investors are interested primarily in social stability.
"In a democratic society, where dissent cannot be suppressed, it becomes necessary to listen to voices of protest and try to carry everyone along. India is much admired for its adherence to democratic norms and this reputation needs to be preserved," he argues.
He says that the 2019 Lok Sabha elections gave the NDA government a massive mandate and Prime Minister Narendra Modi has accumulated enormous political capital.
"He must use it to tackle the many serious economic challenges that are emerging, and not allow divisive issues to occupy centre-stage," he says.
Ahluwalia, who played a key role in the transformation of India from a state-run to a market-based economy, presents the story behind the country's economic growth in the first half of the UPA's tenure as well as its achievements in poverty alleviation.
He also discusses the successes and failures of the UPA regime during which period he served as deputy chairman of the Planning Commission, a Cabinet-level position. He mentions about the policy paralysis and allegations of corruption that came to mark the last few years of UPA 2.
He calls his book, published by Rupa, a travelogue of India's journey of economic reforms "in which I had the privilege of being an insider for 30 long years".
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