In his first interview after taking over as Niti Aayog Vice-Chairman, Suman Bery tells Indivjal Dhasmana and Sanjeeb Mukherjee that his important job will be to ideate a medium-term roadmap for revival of economic growth. The conversation ranged from cooperative federalism to growth-inflation trade off and more. Edited excerpts:
Q: You have taken over as Niti Aayog Vice-Chairman at a time when various agencies have cut economic growth projections for India and raised the outlook on inflation. How do you see Niti’s role in this?
A: From a medium-term perspective, there is a lot of turmoil in the world and it can create opportunities, but also risks. So I really think that as an incoming V-C of the Niti Aayog, an important job of mine is to think as to what constitutes a medium-term roadmap for revival of growth. Politicians across the world, not just in India, are sensing that future growth will be different from the past. One reason why, I think, I have been selected for this job is to think clearly of a medium-term framework and how that framework will be different from the past.
Q: Are you looking at reverting to a five-year plan in a different form and format?
A: I would say that it would somewhat be closer to what I experienced as chief economist in Shell. Shell in the 1970s started something like scenario planning. I am not saying that Niti will do scenario planning. But, we want to equip the Prime Minister and his Cabinet ministers with techniques for dealing with an uncertain world. Nowadays, cooperative federalism is marred by states complaining about discriminatory treatment in resource allocation and repeated tussles between the Centre and states on issues.
Q: How do you think these can be addressed by Niti?
A: Well, any federal structure has tensions such as this. But, if you are saying that tensions are so huge that states don’t want to learn from each other, I will say no. I would like Niti to understand states’ problems, process them and use our conversational power in Delhi to trouble-shoot them. Niti should be seen as an honest broker between the Centre and the states.
Q: At a time when RBI is focused on fighting inflation, do you think there is a policy trade-off in tackling inflation and growth?
A: I agree with the Governor’s statement that nipping inflation in the bud is a better guarantee of sustainable medium-term growth than having extraordinary actions that some central banks abroad are having to do. My short answer to your question is there is short-term pain for long-term gain. There is no rule book on the best response to a shock from the supply side because you are crunching demand. Easy money around the world has led to asset price boom. So we’re ending up the world over with rather unequal recovery. It is a political decision, execution is technocratic.
Q: There are expectations that there would be more Fed rate hikes. Do you fear huge volatility in capital flow to countries like India due to this?
A: As it is, FIIs are pulling out money. So, they have anticipated this. We in any case have been wanting to be succeeding in substituting FDI for FPI. The number that I would focus on is what is happening to FDI. Frankly, we should be paying much more attention to what is happening to China because our competitiveness with China is also very important.
Q: Niti has abandoned the official poverty line that the erstwhile Planning Commission used to bring about. Recently, one paper came out from the IMF and the World Bank each. They differ drastically on abject poverty in India. Do you think it is the right time for Niti Aayog to come out with the official poverty line?
A: It is not for Niti to establish a poverty line in the absence of a household consumption survey. It has not been easy to do face-to-face surveys in these times. At some time, NSS will again conduct this survey. If the Government decides that the poverty line is an important method for their purposes, Niti will do what it would be asked to do.
Q: Changing world dynamics, particularly the Russia-Ukraine war, has put a question mark over the Budget numbers for 2022-23. Will Niti be suggesting new numbers to the Government?
A: Those numbers come from the Finance Ministry. Our job is to provide a medium-term growth outlook and to locate India’s transformation in that medium-term growth. Over the last two years, we have been forced to improvise because of two reasons— Covid19 and the war– we now need to take stock and to see that in the changed world what does that imply for our developmental model and for integrating states in that development model.
Q: NITI has an important mandate of cooperative federalism. Over the years it seems to have been diluted a bit. What’s your view?
A: That’s your perception, but I certainly have been commissioned to enlist my full force behind cooperative federalism.
A successor to the Planning Commission with a difference
NITI AAYOG (National Institution for Transforming India) is a successor to the Planning Commission of India.
Though it drew its manpower from the planning body and is housed in the erstwhile Yojana Bhawan in Lutyens’ Delhi, it can at best be introduced as a distant cousin of the Soviet-era behemoth.
Unlike the Planning Commission, the Niti Aayog has no powers to allocate funds to Union ministries or craft schemes for states. However, it has been able to create a niche, thanks to its regular manoeuvring in the policy space, intervening in areas such as asset monetisation, divestment, electric mobility, hydrogen fuel, start-up ecosystem, innovation labs et al.
The Aayog is structured in a way that its Vice-Chairman holds the rank of a Cabinet Minister whereas the CEO, a Secretary-level officer, draws power from an arrangement that all heads of 27 verticals, for instance, education, agriculture, water and land resources, industry, infrastructure, rural development, public private partnership etc., report to the officer. There are three full-time members.
Then there is a Governing Council comprising CMs and Lt-Governors, a mechanism tasked with evolving a shared vision by the Centre and states. Its gamut of activities, according to its annual report 2021-22, is divided into four broad segments — policy and programme framework, cooperative federalism, monitoring and evaluation and finally, think-tank, knowledge and innovation hub.
As the mandate is wide, it at times ends up infringing on other departments’ turf. However, since the Prime Minister heads it and its policy directives come straight from the PMO, the question of any ministry objecting to Niti Aayog’s overreach doesn’t arise.
