National Monetization Pipeline Good Idea But Risks Involved: Indian Economist

Kaushik Basu an economist from India and Professor at Cornell University says National Monetisation Pipeline Good Idea But Risks Involved. (Kaushik Basu, @kaushikcbasu/Twitter)

ITHACA, N.Y. — Comparing the National Monetisation Pipeline with the Goods and Services TaxKaushik Basu, an economist from India and Professor at Cornell University, said it is good. Still, risks are involved in its implementation, too.

Significant assets like airports, highways, railways, which are languishing, would be used well enough through National Monetisation Pipeline, said Basu.

“National Monetisation Pipeline is barely 24 hours old. I do have a view, and the view is that there is a plus side to it, but there is a risk and a considerable risk. I think this is a bit like goods and services tax,” said Basu.

The economist’s comments came after Union Finance Minister Nirmala Sitharaman, on Aug. 23, launched the National Monetization Pipeline that includes the Centre’s four-year plan to monetize its brownfield infrastructure assets.

The government has planned an INR 6 lakh crore ($80837 million) pipeline of assets that can be monetized, including a range of assets put on the block for private sector participation, over four years, from Financial Year 2022 to Financial Year 2025.

Replying to a question on the intent of the policy or the purpose, Basu said that the move to monetize its brownfield infrastructure assets is desirable, but if done wrong, it can backfire.

“I am not close enough. I have not seen the details to be able to tell you which way to go,” said Basu. “But it is important to understand what is being done is a form of public-private partnership.”

“So you bring in the private sector, you almost you rent it out you lease it out you give them. You take money from the private sector, you retain the ownership of these assets, and the private sector begins to use it. This done well can be pretty good. No doubt about it because the private sector brings efficiency in the state continues to own it.”

Talking about the economic recovery of India, post-coronavirus pandemic, he said, “India is recovering, but two things have to be kept in mind, India’s growth in the next year should be over 10 percent.”

India’s growth in the financial year 2020-21 was -7.9 percent, “After dropping that much at 10 percent, rise barely takes you to past where you were two years ago,” said Basu.

He said that the spike would get India out of the pit, and there is a bit of a disappointment because of the goods and services tax management and the lockdown management. Still, he reiterated that India has its fundamental strengths.

“India, I should tell you, has fundamental strengths,” said Basu.

“We have an industry, the pharmaceutical industry, which is so important today. Very mature and big. We have a digital industry, the information technology and the software sector, some of the world’s finest companies, and this is a sector that will grow in importance. So in terms of fundamentals, India is very well positioned.”

He has recently authored a book on Policymakers Journal that talks about two of his favorite politicians, former US President Barack Obama and former Indian Prime Minister Manmohan Singh.

While talking to Obama, he discussed India’s soft power, intellectual power, and space research.

“The way Obama nodded gave me an impression that he understood the importance of soft power,” Basu said.

Meanwhile, talking about Manmohan Singh, he said that he is a modest person. To be humble as a prime minister or a president, the head of the state needs courage.

“I think Singh had that courage and that courage, which people do not widely appreciate, is what allows you to make good solid decisions,” said Basu.

Basu was also the former Chief Economist of the World Bank.

“When I was at the World Bank, I was putting in, among the World Bank’s missions to observe, inequality and how the bottom segments of different countries were doing,” he said, talking about his stint with the organization.

Earlier in 2021, Basu had joined Congress leader Rahul Gandhi at a virtual event on Mar. 2 for an open dialogue on democracy, development, and life in politics, India, and the world.

(With inputs from ANI)

Edited by Saptak Datta and Ritaban Misra

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