Supply side problems our own making: Alok Sheel

The supply side crisis plaguing the Indian economy is a self-inflicted problem, said Member Secretary of PM’s Economic Advisory Council Alok Sheel on Tuesday as he called for more fiscal restructuring, reforms in agriculture marketing and labour-intensive manufacturing.

“In a demand-constrained world, India has the luxury of grappling with supply side problems. Our supply side crisis is of our own making, so the solutions should be within our control. This will not be easy. Like the celebrated poet T S Eliot said, ‘Between the idea and the reality, falls the shadow’,” he said, speaking at a National Workshop on Macro Policy Environment, IPRs and Competition Policy at the Indian Institute of Management - Bangalore (IIMB).

Calling upon India to leverage its three ‘brahmastras’ (critical levers or arrows) – agriculture that targets the inflation problem, labour-intensive manufacturing that targets current account deficit and fiscal restructuring that targets the infrastructure deficit — Sheel said, “We should fire these three arrows from the crossbow of good governance.”

“When the entire world is outsourcing to Bangalore, we must not outsource our own thinking to Western universities, thinktanks and international institutions whose governance structure continues to reflect the political economy of an age that is gone,” Sheel said.

He said that emerging markets should step up to the plate by injecting their own perspectives into the global debate. “The global economy is not out of the woods; it is on extraordinary life support but even with such support, with the notable exceptions of Germany and the United States, other advanced countries are struggling with the aftermath of the Great Recession,” he said, explaining that in India, the challenges were different.

Stating that financial depression may not remain a peculiarly emerging market phenomenon, Sheel reiterated that emerging markets were now better placed to inject their own perspectives into the global debate at premier high tables like the G20.

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