On Tuesday, Prime Minister Narendra Modi met with a group of experts, including economists, policy observers - and, most importantly, business leaders. While the government and participants have been unfortunately taciturn about the details of what was discussed, the purpose of the meeting was, according to a broad overview delivered by Finance Minister Arun Jaitley, about how India could respond to the troubles in China. It is, of course, simplistic to assume that India will automatically gain from China's current economic problems, and it is unfortunate that this should form the premise of any discussions. Without wide-ranging domestic reform, India will gain little even in comparison to a struggling - but far more efficient - China, and global turbulence will in fact hurt the Indian economy. It is these questions that should be the preoccupation of the government.
It is, however, unambiguously good news that the government has opened its doors to business leaders in order to receive their feedback about what is or is not working. This process should be repeated and expanded. Instead of just the biggest Indian old-economy businessmen, selected medium- and small-scale enterprises and new-economy success stories should also be included in consultations. This will allow the Prime Minister and his economic team to access a broader and more relevant range of opinions as they plan the revival of the Indian economy. Finally, the process should be institutionalised. Under the last government, there was a council that served to connect the Prime Minister's Office with industry. Sadly this appears to have become defunct. But something similar, if more flexible, should be introduced. In addition, there is no reason for what was discussed to become a closely guarded secret. After all, it is policy prescriptions that are being talked about, not corporate secrets. Few business leaders would talk about secrets in front of two dozen of their peers. Knowing what was discussed would only aid the construction of confidence in Indian economic policy making.
However, it is also true that advice from India Inc on policy issues should be taken with a pinch of salt. Sadly, Indian business leaders are more comfortable asking for sector-specific concessions and actions than in pushing for overall policy reform. Those in a core industry asking for protection from their newly cheap Chinese competitors, for example, do not have the economy's best interests at heart. Such protectionism will hurt those companies who use that industry's output - who would be denied the benefits of a price fall. In the end, the wider economy, and consumers, would be hurt. This is why policy making must involve consultation, but also must be a collective, overall process. This needs teamwork and consensus-building. It is thus good news that the Prime Minister's entire economic team, including senior ministers in economic policy-related ministries, were all in the room and part of the conversation. This should help the government dispel the impression that its economic policies are driven only by the Prime Minister or the finance minister. To have all ministers in charge of the various sectors of the economy at this meeting will be seen as a positive signal, hopefully followed up with cohesive thinking and an integrated approach to facing the challenges of achieving faster growth.
