'India's Dream Team failed to deliver'

Be it monitoring the nitty-gritty like the audio quality in the auditorium, signing cheques or rushing forward to post questions as soon as the floor was thrown open following a session, Dr Ajit Ranade was everywhere during the golden jubilee celebrations of the Indian Institute of Technology-Bombay.

In between all the hectic activities, Ranade, the 1982 batch alumnus who is currently the chief economist of the Aditya Birla Group, spoke to Chief Correspondent Krishnakumar P on many issue ranging from what makes IIT-B so special to why the dream team of India's economy did not quite deliver. Excerpts:

There is a sense of purpose in the alumni association of your institute...

The IIT-B alumni body is unique. A non-profit organisation, the alumni has an elected board of directors and a salaried, full time chief executive officer.

We also have a Heritage Fund registered in the US. It helps in channelising donor funds and also in networking and incubation of entrepreneurship.

Despite either Kharagpur or some other IIT topping various academic lists, IIT-B seems to offer all round development more than other institutes...

There is always this sibling rivalry among various IITs that can sometimes get unhealthy.

In his address, the director of IIT-B said out of the top 100 students who pass the entrance exam, 50 routinely chose to come to IIT-B. That shows it is a preferred IIT.

What else sets you apart?

Most of the IIT-B faculty are themselves IITians. I don't think any other institution in the world can boast of so many alumni coming back as faculty members.

The IITians are the most globally mobile talent pool you will get. The IITs are mostly government controlled institutes. So the faculty does not get paid as much as they would earn globally. But still the alumni try to do their bit. IIT-B offers a 'joining bonus' of Rs 300,000. I agree it is not much but money is not the real thing here, the gesture is.

How did you move from technology to finance?

After the IIT, I did my Ph.D in economics and then I moved into academia before getting into corporate assignments.

How do you see the year unfolding for India in these hard times?

Many experts have predicted a 5-6 per cent economic growth. This is both doable and heartening considering most other countries are facing zero or negative growth. Remember that a huge amount of fiscal push has been given and it is bound to have its impact.

Our government, before all this happened, had done many things, which have turned out to be good for the country in hindsight like (farm) loan waiver and Pay Commission (recommendations for the central employees).

Our system is different from that in the US. There was no failure in the banking system here and there was no major mortgage problem. Our problem was mostly because of the financial investors pulling out. Having said that, as, a growing economy we cannot be totally immune to the global phenomenon either.

How would you rate the performance of the government in the last five years?

I don't think they did much on reforms. However, the biggest achievements of this government are bringing in the National Rural Employment Guarantee Scheme and the Right to Information Act.

It has brought about a lot of transparency and accountability. Now, an average citizen, through this act (RTI), can ask for files at levels that were restricted only to the members of parliament.

Do you think the NREGA is a success?

I would say it is. You should appreciate it as an idea first. There may be problems and discrepancies in the implementation. But an idea and its implementation are different things. No doubt, the implementation failure has to be looked into and fixed.

Compared to the fertilisers and oil bond subsidies which come to around Rs 2 lakh crore (Rs 2 trillion), the money in the NREGA is hardly Rs 10,000 crore (Rs 100 billion).

This scheme has been running successfully for 35 years in Maharashtra. There must be something right about it if it has been working for such a long time.

Other areas where tremendous ground has been gained are health and education.

What are the areas in which it has failed or could have done better?

Roadways. That is one area in which it could have created better infrastructure and labour. There would have been huge demand for steel and cement.

Roadways in India help mostly in getting rural producers to the urban market. For example potato farmers in West Bengal who had been depending on markets near their land are now transporting their produce to distant areas due to the road system. It could have had a huge impact on the economy and hence it was disappointing to see it stalled.

Another area is power. The deficit levels are alarming.

What about reforms?

Since the economy was opened up, there have been seven different governments and 12 different finance ministers. But the direction of reforms was not severely changed... it is only the pace at which they are carried out. This proves everyone agrees on the basic framework and that is the way forward.

How would you rate the Dream Team of Dr Manmohan Singh, Dr Montek Singh Ahluwalia and P Chidambaram?

There were high expectations when they took over. They have not met the exacting standards. This also shows that there are other skills that go into a success story than mere ideas.

Are the US and China edging closer to each other in recent times?

The US and China are like two huge sumo wrestlers locked in a tussle. Yes they are in battle but together they form an extremely stable entity.

The consumption boom in the US was fed by consumer items made in China. They had a symbiotic relationship. China was in turn paid by export earnings which it put back into US bonds.

Every country needs dollar. Today China's welth stands at $2 trillion, and if the dollar depreciates by 5 per cent, 100 billion of China's wealth is wiped out. Just like that.

If that deficit amount is reinvested, it would amount to 14 per cent of deficit in the GDP. That is the kind of inter-linkage that exists between the two countries.

Should India be bothered?

What is happening is a reality and we have to behave strategically. There is no need for undue alarm. And we already have increased the depth of our strategic relations with the US.