Global Economy

Intellectual foundation needed for reforms 3.0: Vijay Kelkar

Vijay Kelkar, a former finance secretary and veteran policymaker, has been closely associated with several crucial reform initiatives over the years. In an interview to TOI, Kelkar, who also served as the chairman of the 13th Finance Commission, calls for governance and administration reforms as well as knowledge-based policies. Excerpts:

What should be the policy focus in the medium to long term?

Compared to 1991, there are several new problems. You have had a number of successful reforms measures in 1991 but, in some areas, there have been inadequacies. So, we have to handle both — new challenges and some earlier ones as there are areas where we have not done enough progress.

In the Kelkar-Shah book, ‘In service of the Republic: The art and science of economic policy’, we have emphasised governance reforms. Governance reforms include strengthening of the “rule of law” through legal, judicial and administrative reforms.

The new challenges for our country have come up in the last 30 years in addition to the continued challenges of achieving higher and equitable growth. New challenges are due to the growing global climate and environmental stress and consequent existential challenges to our planet. These now require greater attention and we need policy reforms to make our growth green. Then there is the issue of management of our cities so that these are governed properly and become engines of growth like the great cities across the continents. The third issue is an old one of building human capital, which means more effective supply of public health and higher-level education. Human capital bonds the magic wand for making India the world’s Innovation Capital.

Do you think reforms are now difficult to do?
In our book, we called the 1991 reforms as Mark II. Mark I reforms towards industrialisation were launched by Prime Minister Jawaharlal Nehru through the Planning Commission. Both in Mark I and Mark II reforms, a lot of thinking went behind those transformational episodes. Mark II reforms too were based on the solid intellectual foundation laid by scholars like professor Jagdish Bhagwati, Arun Shourie and many other thinkers who worked on India’s development challenges .Of course, Dr Manmohan Singh’s own work was also one of the major sources of the intellectual basis for the 1991 reforms. Similar intellectual inputs are required now and detailed work needs to be done for the third generation of reforms, or Mark III reforms.

What do you think should be done to expand the market for reforms?
First thing is much more detailed knowledge and analysis. Take for example the recent problems that we faced on the vaccination issue. This was because we did not have proper data, and which led to inadequate policies. This was further compounded due to inadequate transparency and over-centralisation. More knowledge, better analysis and greater decentralisation will lead to design knowledge-based policies. More knowledge and transparency will indeed lead to much better policies. We also need to spend a lot more on social sciences research and improving data quality. I am afraid the data quality has deteriorated over the years and this challenge is even more acute at the state and city levels.

What are the reforms that you see in the next 30 years?
The next reforms will have to cover reforms of governance, urban affairs and empowerment of state governments, cities & local bodies. To meet the Paris climate goals and accelerated green growth, we will require much greater democratic decentralisation.

What is the difference that you see in the civil servants of your generation and now?
My mentor Lovraj Kumar once told me never speak about your predecessor or your successor!


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