NPA continues to remain a challenge for Chief Economic Adviser Arvind Subramanian, who in a free-wheeling interview to ET, talks about a fix and how GST could serve its purpose if the government goes for lower rates.

Edited excerpts:

You have to author the economic survey but the time table has now been changed. So has it been decided when you are going to table it, are you on track because you have to do it a month earlier now?

Yes, exactly I think the time table is fixed. It is going to be the day before the budget and since the budget, I think it going to be on 1st of February, we have to table it on the last day of January. So, it has been advanced by exactly one month. So it does mean that we have to compress our work schedule and we have started working on that and we are hopeful that we will meet the deadline. But we have some very exciting ideas to explore in this.

We have not really seen the revival or the NPA problem go away in totality. Do you think one day we will have to write it all off and are we just delaying it?

I do think that it represents. It is one of the major challenges for the economy in the short run because it is true that credit to industry is relatively weak and corporate balance sheets are also not very strong. So, we have to work our way through this problem before I think, we can see private investment and growth pick up even further. It is a challenge now - how much you have to write off, how you have to do that. Remember, for the last couple of years, there have been a number of schemes that the RBI has had to try and address this issue.

I am not clear exactly how much progress we have made but clearly, we need to do more on this. If you look at what has happened in the last four-five months, there have been a series of reform measures and let me just list some of them - the first was we had the Aadhaar Bill in the budget session, then we had the Bankruptcy Code that was passed, then the monetary policy committee arrangements which codified arrangements between the RBI and Ministry of Finance and then above all the GST. I think the GST is really a game-changing reform and I do not think one should ascribe anything to anyone reform measure but I do think that the GST is of such a magnitude that it has seen to have impressed foreign investors.

What do you see as a reasonable GST rate, you have for example had suggested 18%?

We had actually suggested a range between 17 and 19%. Philosophically and taking into account the Indian situation, I think at the margin we should err on the side of lower rates rather than higher rates.