‘India suffered from huge subsidy spends’

PATNA: India and Egypt have suffered from huge subsidy spends for a long, long time, said Dr Asad Alam, World Bank’s country head for Egypt, Yemen and Djibouti while delivering a talk on ‘Egypt — Renewing the Social Contract’ at ADRI on Friday.

Alam said he felt Egypt had once pledged a kind of highly inclusive ‘contract’ to Egyptians in the form of inclusive education, better health and jobs. He said social contract can have different meanings as society keeps evolving and the contract must change accordingly, too.

“For 20 years, there were no changes made to the price of petrol and when the subsidy zoomed to more than 100 per cent and outnumbered the cash the country spent on healthcare and education taken together, it began feeling the heat. So, among the first salvos that Egypt fired as part of its multi-pronged reforms was the subsidy reduction programme a few years back,” Asad said, adding that “in the last three years, subsidies have been actually cut to 3 per cent of the GDP.”

Talking about another mega reform that Egypt undertook, Alam said the country kick-started its industries by opting for solid currency depreciation, probably to the tune of 120 per cent, and this incentivised its export of textiles and other things. “Another mega reform that Egypt has undertaken is to increase the ease of doing business in the country; interestingly India and Egypt are quiet close to each other on this count.”

Further, what can be easily perched on the three pins of this triangle of reforms Egypt went for in the last couple of years, Alam said, includes increasing the transparency and efficiency of public spending, focusing on inclusivity of its institutions, sending more and more cash to the local level and heightening the voice and participation of common Egyptians.

Earlier, ADRI member-secretary Shaibal Gupta welcomed the guests. Syed Gulrez Hoda, member, Bihar State Planning Board, presided over the talk. Eminent participants included Rameshwar Singh, Dr A A Hai, Dr Suman Singh, Anil Kishore Yadav, Pravin Kishore, Dr Rash Bihari Prasad Singh, Dolly Sinha, Nandini Mehta and Sunita Lall. Professor Prabhat P Ghosh, director, ADRI, proposed a vote of thanks.