Sanjeev Sanyal, principal economic adviser to the finance ministry, is widely regarded as one of Asia's leading economists. He has spent two decades working in the international financial markets and was named Young Global Leader in 2010 by the World Economic Forum.
In 2007, he was awarded the Eisenhower Fellowship for his work on urban issues and was also honoured by the Singapore government at the World Cities Summit, 2014.
Born in Kolkata, Sanyal holds a bachelor's degree in Arts from Shri Ram College, Delhi University along with two master's degrees from Oxford University.
In an interview with CNBC-TV18, Sanyal was asked about the priorities of the Modi-government in the second term, the focus areas in the upcoming Budget, the government's next course of action in terms of NBFC and debt crisis, among others.
He has authored four best-selling books — The Indian Renaissance: India's Rise after a Thousand Years of Decline , Land of the Seven Rivers: A Brief History of India's Geography , The Incredible History of India's Geography and The Ocean of Churn: How the Indian Ocean Shaped Human History . "We should go for an export-driven, private sector investment-driven growth model"
Q: What would be the priorities of the new government for startups? We have a Budget perhaps in a few weeks. If you can tell us when the Budget is likely to be and what will the Budget try to address?
Sanyal: My guess is the Budget will be at some point in late June or early July that is the usual practice. But I cannot speak for the new government and in any case, I cannot comment on what the new Budget will say or what the priorities will be. All I can say is... it should be sort of the general strategy over the next several years.
Q: You can tell us what may be the priorities for the government or ought to be?
Sanyal: We need to have a quick review of what was achieved over the last five years because that will provide you with a sense of how the next five years can be or should be different. So what were the priorities for the last five years? One major priority was re-imposing macroeconomic stability, particularly inflation because of what had happened in the previous five years... I think that is a key success of the previous five years because I think inflation has now been anchored at a very low level. The lowest we have seen at least in generations.
The next important priority was making sure the last mile delivery of services to the poor... the various schemes — Ujjwala and the health scheme or whether it is Jan Dhan or even Aadhar... the other frameworks were Insolvency and Bankruptcy code and GST and of course, the framework of creating a basic infrastructure for the country.
So what should we now do going forward? I think we should build on these foundations and essentially go for growth. In particular, I would argue we should go for an export-driven, private sector investment-driven growth model, some version of what has been used pretty much by every country in history to grow fast.
We can easily increase our share (of export) even if the overall basket is not growing. I think we need to take that approach to growth.
Q: I wanted to know particularly what the government’s view is as far as the NBFC and debt crisis are concerned and what are the immediate steps that the government could take to solve this issue?
Sanyal: Both the Reserve Bank of India (RBI) and the government are watching this very carefully. However, we need to be very careful not to intervene every time there is some disruption in any sector. Otherwise, we might as well just go back to the bad old days of command and control economy. In general, the preference is to allow things to play themselves out naturally amongst private sector entities as a part of the market. However, we also recognise that there can be certain issues that may pervade the wider market and you may see there being a second round and third round effects. So in those situations, yes, we do watch it carefully and try to make sure that the contagion effect is contained.
We have done this in the past in multiple ways. There have been episodes where liquidity windows have been opened up. Last year when we had a certain episode with IL&FS, you saw we acted reasonably quickly and ring-fenced IL&FS and also provided liquidity in multiple ways, coordination in multiple ways. So certainly, if there is a wider issue with the credit market, the authorities will take whatever necessary step is necessary. However, we also need to be careful of adverse selection and moral hazard... but let me assure you that both the central bank and the government are watching this very carefully.
Sanyal: ...If it appears that there is a contagion and there is a wider credit market problem that is being affected by few entities, then whatever needs to be done will be done and we have shown the willingness to act quite quickly in the past as well and that is why I mentioned the previous episodes.
Q: Are you convinced that people will keep on selling their assets and the problems will whittle down on their own?