Global shocks are best times for radical reforms: G20 Sherpa Amitabh Kant

India’s G20 Sherpa Amitabh Kant has said the best conditions for reforms in economic policies, to spur investments in cutting-edge technology are now since the global economy is in turmoil.

Finance Minister Nirmala Sitharaman shall present her annual budget in less than three months and Kant's comments are therefore significant.

“Global shocks are the best times for radical reforms”, he said at the release of NCAER’s mid-year review of the economy, on Saturday. He said the Indian government has been spending disproportionately more on the rural sector and agriculture, but those cannot provide quality employment.

He added that India needs to refocus on other areas, pointing to the need to expand the money spent on green technology. “We must show the same urgency in the green sector as we did to bring in a digital ecosystem to make India a data-intelligent country”, he said in his comments on the NCAER findings.

The Sherpa said the government has plans to push disinvestment and expand asset monetisation to generate finance for investments. He said since the EU Carbon Border Adjustment Mechanism will be in place by 2026, every sector from where exports happen in India has to pivot fast so that their products pass the test.

He said the government’s policy of hand-holding major foreign investors to develop manufacturing units in planned urban areas was useful in this context. Those investments will offer a jump in quality employment away from agriculture. Apple, for instance, has got all its main contract manufacturers — Foxconn, Wistron, Pegatron and recently Luxshare, operational in India with state governments actively pushing those investments.

Referring to the criticism of Production-Linked Incentive (PLI) schemes that has drawn in many of these companies, he said that it was not protectionist. Instead, according to him, the USA’s Inflation Reduction Act was an example of a protectionist policy. “It just encourages companies to shift base to produce in the USA, without getting into the scale economics”, he said. PLI is instead designed to expand the scale of investment in manufacturing units in futuristic technologies.