The old world economic order is collapsing and India, which was on the periphery of the old architecture, is more likely to gain than lose from the emerging new world order, said TV Somanathan, finance secretary of the Indian government. .

“We can only be a global economic power by becoming a strong national economy and a cohesive and peaceful society,” he added.

He was delivering the XVI CUB Shri V Narayanan Memorial Lecture on “India in the Emerging Global Economic Architecture”. The annual lecture series in memory of the late V Narayanan, a seasoned banker and the longest serving Chairman of City Union Bank (CUB) under whose leadership the bank experienced phenomenal growth. He died in 2004.

“If India really wants to play a significant role in shaping the emerging global economy, ironically the biggest challenge lies on the home front,” Somanathan said, adding, “we cannot shape the world order if we don’t have a strong domestic economy.”

Four key steps

He highlighted four important steps to strengthen the national economy, including prudent and conservative fiscal policies for the States and the Center, minimizing external debt to reduce external shocks, promoting a strong domestic investment climate and the exercise of independent thinking in economic decision-making.

“We need to reduce the budget deficit, especially at the central level. We need to improve the quality of public spending by focusing on the growth-enhancing aspects of public spending. To do this, we need to reform some of our poorly targeted subsidies like those for electricity and fertilizers,” he added.

Highlighting India’s independent economic thinking, Somanathan pointed out that offering massive fiscal stimulus was trending globally in 2020, while India did not join the league and instead provided a lot relief in the form of credits and monetary measures. “We emerged in reasonably good shape compared to most other countries.”

The senior official also added that the Covid-19 pandemic and the ongoing Russian-Ukrainian war have changed the world order. He said the fallout from the war includes the creation of a de facto economic bloc between China and Russia, energy challenges for Europe due to their withdrawal from Russian energy dependence, in addition to the impact of Brexit on Great Britain and the European Union (EU). . Such chaos, Somanathan said, is good for countries like India.

“If we continue to grow at 6-7% per year, we will be well ahead of many countries and continue to improve dramatically in this new system,” he added.

He concluded the conference by highlighting what India should do to become a global economic power – having the ease of doing business like the city-state of Singapore, the science and technology innovation like the United States, the emphasis on quality and work ethic like the Japanese, the manufacturing prowess of the Germans and the quality of life of the Scandinavians.

Published on

June 11, 2022