Dr. Rakesh Mohan over his long and illustrious career has been the Deputy Governor of Reserve Bank of India (RBI); Executive Director at International Monetary Fund; Chief Economic Advisor to the Ministry of Finance, GoI and more. In an exclusive interaction with The Dollar Business, on the eve of the launch of his new book, he held forth on a wide-range of topics including fiscal responsibility, GST, the role of RBI and more.
TDB: Congratulations on your latest book – India Transformed: 25 Years of Economic Reforms. What is the theme?
Dr. Rakesh Mohan (RM): The book is a documentation of India’s transformation, over the last 25 years. It begins from the time India embraced the liberalisation, privatisation and globalisation (LPG) model, and how the country’s image changed from a poverty-ridden, slow growing, closed economy to that of a fast growing, open and dynamic one.
The accomplishments that we see today weren’t achieved overnight and it is still a work in progress. One of the points I have emphasised in the book is the level of consistency that all the governments have shown in their approaches while reforming the country. For instance, Goods and Services Tax (GST), as a concept, originated 30 years ago. I believe, it was in the year 1986 when the former Prime Minister Rajiv Gandhi and Finance Minister V. P. Singh brought forth the idea of Modified Value Added Tax (MODVAT), which finally became input tax credit (ITC). And there are many such stories and examples which ‘India Transformed’ talks about.
TDB: Do you think governments have been doing their best for fiscal reforms?
RM: Each government has contributed to the idea of fiscal reforms and the process continues. I believe that fiscal responsibility in the Budget was given serious thought first in 2003, when the Parliament enacted the Fiscal Responsibility and Budget Management Act (FRBMA). The law was aimed at institutionalizing financial discipline, reducing fiscal deficit and strengthening fiscal prudence. I think the agenda initiated by the then Vajpayee-led government has been followed by other governments too. As a result, when PM Manmohan Singh was at the helm, we almost achieved the fiscal objective of 3% deficit in 2007-08.
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