Centre needs to opt for heavy disinvestment: Acharya

New York: The Indian government needs to reduce its reliance on bond markets and undertake a heavy disinvestment programme along with urgently implementing land, labour and agricultural reforms, former RBI Deputy Governor Viral Acharya said.

Speaking at a panel discussion at Columbia University here on Friday on the 'Indian Economy: The Next Five Years', Acharya outlined a few "possible remedies" and recommendations for the Indian economy going forward.

"I think my main recommendation for the years to follow is that maybe we need to carefully consider doing less. I think less may be more for the economy as far as government programmes are concerned at the present," Acharya said.

"It may not be easy to pull back on certain announced programmes. But in that case, one has to rationalise heavy programmes that are not delivering the supposed objectives," he said, adding that those programmes which are maybe the least attractive politically can be wound down as soon as possible. "Some space needs to be freed up for others to borrow in the Indian economy," he said.

Acharya, Professor of Economics at New York University Stern School of Business, was speaking at the Columbia Indian Economy Summit hosted by the Deepak and Neera Raj Centre on Indian Economic Policies at Columbia University's School of International and Public Affairs in partnership with the Consulate General of India, New York.

He was RBI's Deputy Governor from January 2017 to July 2019.

He further said that the government needs to reduce its reliance on the bond markets.

"I think it has to undertake a really heavy disinvestment programme ideally by selling of majority stakes so that there is some improvements in productivity being accumulated at the same time by raising government funds through equity markets rather than bond markets."

He also stressed that he strongly supports creation of an independent fiscal monitor, on the lines of a congregational budgeting office, where every time a programme is announced, there is an audit within two months that looks into what are the next five-year implications of financing to be met for the particular programme.

"I think this could also hold a mirror to the government funding as a whole if the targets are being just softened over year after year after year with some convenient excuse or the other.

I think there should be a much greater discussion on this in the country."

Acharya also emphasised that the time is "really ripe" for land, labour and agricultural reforms in India.