'Modern Marx' Thomas Piketty Debates Team 'Modinomics': Highlights

'Modern Marx' Thomas Piketty Debates Team 'Modinomics': Highlights

Arvind Subramanian, Bibek Debroy and Thomas Piketty debate India's economic future.

Three influential economists, Chief Economic Adviser Arvind Subramanian, Niti Aayog member Bibek Debroy and author of the book "Capital", Thomas Piketty, debate India's economic future in an exclusive interview to NDTV.

Here are the highlights:
  • Arvind Subramanian: India is much better cushioned than most countries of the world today.
  • Thomas Piketty: India needs to curb rising inequality if it wants to become a developed country.
  • Thomas Piketty: Indian elite must understand spending on health and education not sufficient.
  • Thomas Piketty: Indian elite need to be shaken up into contributing more.
  • Thomas Piketty: Inequality is rising as Indian elite not willing to contribute to growth.
  • Thomas Piketty: Tax India's rich at much higher rate; Arvind Subramanian and Bibek debroy disagree.
  • Thomas Piketty: Tax GDP ratio is right now 10 per cent; I think it should go up to 20 per cent.
  • Bibek Debroy: Great danger in sweeping generalisations without understanding the context.
  • Bibek Debroy contests Thomas Piketty's numbers on tax-GDP ratio.
  • Bibek Debroy: Thomas Piketty's figure of 10% tax-GDP ratio is not correct; add state taxes, it becomes 18%.
  • Bibek Debroy: We have distribution of consumption expenditure, not on income distribution.
  • Bibek Debroy: Over a lakh villages lack public services, that's the main reason for inequality.
  • Thomas Piketty: India passed RTI 10 years ago; so why is income taxa data missing?
  • Thomas Piketty: Inequality in India under-estimated, gravely under-measured.
  • Arvind Subramanian: Past government to blame for non-availability of tax data; we are working to fix it.
  • Thomas Piketty: Can't choose between growth and equality; we have to take care of both.
  • Arvind Subramanian: Increase in growth does have a first order effect on poverty reduction.
  • Arvind Subramanian: Agree we need more public investment in all sectors - power, roads, education.
  • Bibek Debroy: Much of the debate on public expenditure is misinformed.
  • Bibek Debroy: In constitution, health spending responsibility of states, not centre's.
  • Arvind Subramanian: Devolved more resources to states; now bigger responsibility on them.
  • Arvind Subramanian on Rajan's comment that 'defaulters shouldn't flaunt money': How people spend their money is their private matter.
  • Arvind Subramanian: No views on flaunting of wealth; my worry is corporate debt.
  • Bibek Debroy: Wealth creation is good for everyone in the society.
  • Bibek Debroy: People who have made tons of money will flaunt it; none of our business.
  • Bibek Debroy: Delink liabilities of people from companies
  • Thomas Piketty: Inequality impacts political rights, like barring uneducated from polls in Haryana.
  • Bibek Debroy: There is a difference between saying state must provide education and state must finance it.
  • Bibek Debroy: State support doesn't mean physically running schools and health centres.
  • Thomas Piketty: India has a complicated legacy of inequality relating to caste.
  • Thomas Piketty: India will have to evolve from caste-based reservation to include income.
  • Thomas Piketty: Strange that we don't have access to 2011 socio-economic census data.
  • Arvind Subramanian: Unlike west, state capacity in India is scarce, need to prioritise wisely.
  • Bibek Debroy: Not just capacity, state resources are also limited.
  • Bibek Debroy: Where will money for public spending come from?
  • Bibek Debroy: If state spends 6% on education, 4 % on health, what's left for defence?
  • Bibek Debroy: 14% of GDP is spent on subsidies for poor; but biggest beneficiary is middle class.
  • Thomas Piketty: Access to tax data is important to create trust in government and public spending.
  • Bibek Debroy: Tax data is important, but it's not going to tell us a lot about income inequality.
  • GST
  • Arvind Subramanian on GST: Putting any tax rate in constitution is an outrageous recommendation.
  • Arvind Subramanian: Government has not given up on GST; hopeful that it will see light of the day.
  • Bibek Debroy: If income is taxed properly then there is no need for inheritance tax.
  • Bibek Debroy: Can't tax people twice; if parents have paid tax on their income, why tax again?
  • Thomas Piketty: People should pay less tax on money they make; more on what they inherit.

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