Thu. Mar 28th, 2024
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Former Niti Aayog Vice Chairman, Arvind Panagariya, briefing media on his views on India’s trade policy stated that India needs to return to a very liberal trade regime as it can push growth into double-digit range, as projected by IMF.

Criticizing or addressing India for its stringent stand on liberal trade policy, Panagariya stated that India has begun to reverse the process of liberalization in recent years. He suggested that instead of raising tariffs, India should lower them for the Association of South East Asian Nations (Asean) countries. He said one avenue for liberalizing trade is by lowering tariffs against all trading partners, which the country successfully deployed from 1991-92 to 2007-08. The second approach can be by entering into a free trade agreement with major trading partners.

The former vice chairman cautioned Indian authorities against their tenacious industrial protection stance, as in recent times, India had initiated actions to protect its stressed industries from China’s wrongful investment spree. Notifying against industrial promotion on the “crutches of protection”, underway through India’s recent investment policies, he stated that it would be a mistake to downplay the damage that creeping import substitution can do to India’s growth and jobs ambitions.

Narendra modi’s government in recent times has been promoting indigenous industries under his ‘Atmanirbhar’ campaign. With government approving Rs. 23,000 crore worth of toy clusters, to implementing crippling investment laws for China and neighboring nations, India has been actively promoting island economy. Diplomatically, such stringent, active actions are considered sound but from the viewpoint of economy, they can have crippling effects.

Mr. Arvind actively acknowledged India’s potential and stated that with a low corporate tax rate, brought about recently after stiff competition from Vietnam, labor law reforms, GST, and bankruptcy law, India is poised to take on to global markets in a major way. Additionally, a massive privatization programme on the anvil, and measures to de-stress the banking sector and the non-banking financial sector under way, India authorities are trying to return the lost impetus of Indian economy, fair and square.

While addressing the 36th Commencement Day Annual Lecture organized by Exim Bank of India, Mr. Arvind added that the growth measures of India, as aforementioned can only be realized with liberal trade regime. He stated “But this requires one additional key ingredient: a more liberal trade regime”.

According to the former vice chairman, United Kingdom and European union stand as the land of opportunities for India as their markets and their agriculture sectors pose no threat to the livelihood of the Indian farmers.

Talking about future transformation of the economy, Panagariya said, at present, 42.5 per cent of the country’s workforce is employed in the agriculture sector, and for rapid transformation, nearly half of this workforce needs to be moved to industry and services in the next ten to fifteen years.

This is easier said than done as India’s service sector was the worst affected in the economy and is expected to contract by 9.25% for the current fiscal. Additionally, it requires the creation of a large number of jobs in industry and services, which is another arduous task as India faced 45-year low employment rate last year.

According to Mr. Arvind, the only way to accomplish this is by creating an environment in which successful export-oriented firms can emerge and flourish in labor-intensive sectors such as apparel, footwear, furniture, toys, kitchenware and stationery among others. As FDI will flow in India, it will reportedly create a potential job market.

As it is rightly known trade makes everyone better off, thus with crippling economy, growing unemployment and growing lower class the need of the hour is a liberal trade policy for India.

By Shivani Khanna

A woman who believes in equal rights and aspires to inspire people through her writings. I aspire to contribute to the economic world and society with diligence and thus being an economic advisor tops my career ambitions . I currently am pursuing Economic honours ( at undergrad level) from delhi university.