'After saade saath saal, Modi govt has come of age!'

'It has taken 7-and-a-half years for this government to understand the fundamentals of economics.'
'If the prime minister wants to leave an imprint, he has to see to it that this succeeds.'

The debate continues..

Whether the finance minister's plan to monetise India's brownfield public assets under the new National Monetisation Pipeline is going to be a success or a failure.

"After nearly 75 years we have realised that all these assets are not put to proper use by the government... Handing it out to the private sector is the best possible way subject to checks and balances," M R Venkatesh, the well known economy watcher, tells Rediff.com's Shobha Warrier.

• PART I: 'Monetisation of assets has come 75 years too late'

Do you think private players will have the confidence to dive into projects that involve the government?

I have a different take on this. Your economy has not grown between 2019 and 2021 because of the covid situation.

Whatever was the size of the economy in March 2019 is the size of the economy in March 2021 too.

But the currency circulation in the economy has grown to Rs 28 lakh crores from approximately Rs 20 lakh crores. An Rs 8 lakh crore extra money is circulating in the same size of the economy.

Resulting in inflation...

Yes, that's why there is an inflationary trend. That's why your stock market is rising. So, the government has to place a new set of assets to absorb the liquidity.

And this is the best time to absorb excessive liquidity, and if the government has thought about this, I congratulate them. Strategically, this is the best time to do so.

But if they are going to take credit for bringing down the fiscal deficit by selling the family silver, good luck to them!

Many people are criticising the government for selling the family silver to come out of a dire situation....

What is wrong in selling?

Next, if a piece of asset is held by the President of India, is it superior to what you or me hold? The answer is no.

What is wrong in me paying the market price and buying it? I do not see any economic reason for it. Of course, there can be ideological reasons for the same. And that is irrelevant.

The fact of the matter is we have realised this after nearly 75 years that all these assets are not put to proper use by the government. And the government doesn't have the wherewithal to use the assets in the best possible way.

Handing it out to the private sector is the best possible way subject to checks and balances.

So, you mean because these are brownfield assets, people will have the confidence to make use of them?

Because they are brownfield, and because they have crossed the initial stage of failures and the government does not have the wherewithal to hold on to it, the government has rightly decided to hand them over to people who have viable track record.

But they should ensure that there should not be any riders and stupid clauses. At the same time there must be some proper entry barriers also.

To which hands these brownfield assets go is very important?

Yes. They should have sterling reputation on integrity, good track record and no political connections. They should be professionally manged.

But I will prefix all this with -- the devil lies in the details.

I would also say that the prime minister's reputation is at stake.

IMAGE: M R Venkatesh. Photograph: Kind courtesy M R Venkatesh

Why?

Because he is for the first time breaking away from Nehruvian ideology. This is the first step towards right wing economic thoughts being tested by the Modi government.

In the last seven years, the government has been a pale Xerox copy of Nehruvian ideas.

If the prime minister wants to leave an imprint, he has to see to it that this succeeds.

As a person who has been waiting for this, I am jubilant.

This is the first step. The next step should be to close down ministries. Once you sell Air India, why should you have a civil aviation ministry?

This is what I call the shrinking of the balance sheet of the government, shrinking of the size of the government to make it more effective.

And this will be the biggest set of reforms the government is trying to do. And it has taken 7-and-a-half years for this government to understand the fundamentals of economics.

After saade saath saal, the Modi government has well and truly come of age!

Feature Presentation: Ashish Narsale/ Rediff.com