'Uncertain world economy puts limitations on our growth': Sanjeev Sanyal

In part two of a wide-ranging conversation, Sanjeev Sanyal, economist, historian, and writer explains why the government must not push too hard for growth when the global economy is in the doldrums

By Neha Bothra Forbes India Staff

Published: Jul 11, 2023 12:51:27 PM IST

Updated: Jul 11, 2023 01:01:10 PM IST

Full Bio

Sanjeev Sanyal, member of the Economic Advisory Council to the Prime Minister (EAC-PM) Image: Madhu Kapparath

Sanjeev Sanyal, member of the Prime Minister’s Economic Advisory Council, wears many hats: He’s a leading economist, a historian, a writer, an environmentalist, and an urban theorist. Over the past decade, he has written five editions of the Economic Survey, nine books, and more than 200 published articles. “I’m deeply involved in the management of the economy but since I do not see the world in silos, I do not think many of these things are separate from each other. To understand the economy and how it evolves you need to understand how it interacts with everything, including its past. You need to understand geostrategic issues. I’m very interested in technology too,” he says in an exclusive interview on Forbes India Pathbreakers. Edited excerpts:

On the ‘jobless growth’ debate

Let me make one thing very clear. Our economy needs growth. This whole debate about jobless growth is a red herring and we should not get distracted by it. We need to generate growth in multiple sectors. We have a large population and a diverse economy. We are capable of doing this, so never allow anyone to divert you into this conversation about jobless growth as it is a complete dead-end conversation. We need growth.

Now, obviously, we have to ensure that the population can take advantage of this growth. Yes, skilling is a very important part of it. We are having a lot of conversations around skilling and it is a major segment of our Budget and policy. But it is also important that we find other ways of skilling. Just formal skilling, ie everybody goes to university, is not a meaningful way of doing it. But an important part of this is to maintain flexibility in our labour markets. Many of the jobs that the next generation will do, do not exist today. We need to think about this much more fluidly.

On India’s growth momentum

In terms of our internal dynamics there is pretty good momentum. We are going to spend a lot of money on infrastructure, which is critical. Our ability to deliver has gone up dramatically in recent years. However, do note that the world economy is an uncertain place. This puts, for the time being, some limitations on our ability to grow.

For now, we cannot press the accelerator, because if we do, then domestic demand will grow too fast, we will suck in imports, but our exports will not be able to grow at the same speed because the rest of the world is in recession, and we will end up with a current account problem. So, given that context, I think, quite correctly, our macroeconomic managers are keeping things tight.

I’m not in favour of trying to push growth too hard at this point, but the game is to keep compounding it. Importantly, at some point the world economy will also turn, and at that point in time we should be ready to take advantage of that, and that is why all this infrastructure we are building is important. When the time comes, we should be able to export stuff out.

We are growing rapidly and we are easily the fastest growing economy in the world by some margin. The question is, can we grow faster, and the answer is yes. But we require a clear highway ahead of us in terms of the world economy.

Part one: You cannot see the world in silos: Sanjeev Sanyal

On climate goals

Of course, energy transition is a good thing for climate change and restricting carbon emissions. But it is also good because we are not a hydrocarbon rich country. We are not a country endowed with a large amount of oil and gas. We have some coal, but not a great deal of it. But we have a lot of sunshine. So, it fits in with our agenda that we should be able to do this transition.

But, in this context, I would also like to point out that too much of the conversation ends up being only about carbon mitigation. We have to pay attention to adaptation. Whatever happens, climate will change. Whether because of human intervention or because naturally climate changes. There are other areas of environmental management that we don’t seem to pay attention to. For example, managing oceans, or managing the use of plastic which we are scattering into the environment.

On urban planning

This is a very vast subject. One big problem that we have in India is that we have a mental block against villages. Somehow the process of urbanisation is seen as being suspect in its own right and therefore to be discouraged. This is quite odd. Also important is that whether we like it or not the process of development leads to urbanisation. I’m not saying that everyone has to move to Delhi NCR. Urbanisation comes in many forms. Urbanising our villages is also a part of the urbanisation process.

First thing we need to do is to embrace urbanisation and say this is not something to be suspicious of or discouraged. Having said that, we also need to move away from this rigid master plan view of cities to the extent that we do plan our cities, but we tend to do this in a very rigid formulaic way. Our entire idea of urban planning is that we need to zone everything.

This has caused great damage to the way we run our cities. Our building codes, for example, are utterly outdated. It is very important to stop having these standardised building codes and allow for architectural innovation that is relevant to that place for its climate, geology, and culture. Allowing for fluidity in our building codes is critical.