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Sansad TV: Perspective- India’s Resilient Economy

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Introduction:

Even as it projected a gloomy outlook for the global economy, the World Bank has said that the Indian economy is expected to grow at the rate of 6.6 percent in fiscal year 2023-24. It further says that India is expected to be the fastest-growing economy among the seven largest emerging market and developing economies. According to the World Bank the key challenge for policy makers around the world is to lower the likelihood of a global recession, especially one that could result from rapid and synchronous monetary policy tightening that causes widespread financial stress. Addressing the Madhya Pradesh Global Investor Summit on Wednesday Prime Minister Narendra Modi said Institutions and credible voices that track the global economy have unprecedented confidence in India. The National Statistical Office in its first advance estimate of economic growth for current financial year 2022-23 has pegged that the Indian economy will grow at 7 per cent.

Measures required to revive the economy:

  • The government should address the growth slowdown concerns; free up funds for investment and spending by banks, housing finance companies and MSMEs; and importantly, undo some controversial proposals, in the budget and outside it, which were affecting sentiment in the markets and the corporate sector.
  • Promote the ease of doing business and even the ease of living for ordinary citizens.
  • Restricting imports by the government should not be done because it is anti-consumer and overall raises the cost of production.
  • The issues surrounding auto sector must be addressed
  • The Reserve Bank of India (RBI) can quickly increase the amount of cash in the economy.
  • We need to follow expansionary fiscal and monetary policy.
  • Prioritize growth now than inflation target.
  • Then banks, especially public sector banks, can use that together with interest rate policy to provide easy credit. A larger supply of credit should lead to cheaper credit.
  • Direct tax code reform is very important for small businesses.
  • This will have to be supported by reduction of the administered price of credit, which is the RBI’s repo rate.
  • There could be hurdles to credit off-take due to fiduciary or prudential reasons, so those need to be tackled. Same for mismatched expectations.
  • Higher liquidity and disposable income, and increased employment can pull us out of the problem.
  • Labour laws reforms, land reforms and agriculture reforms also need to be amended to generate employment.
  • The government needs to hold granular conversations with the private sector.
  • A skills and industrial policy which can make full use of an abundant pool of reasonably priced labour

Challenges:

  • We need to work on creating jobs.
  • Farmers distress- Prices in the farm output has been extremely low.
  • Farm loan waiver is not the solution because it further stresses the banks which are under serious NPA problem.
  • Services sector has been growing much in the informal sector than the formal sector.
  • Since report highlight global slowdown we need to boost the investment which may fall too.

Way Forward:

  • Need of land reforms.
  • Need of labour reforms.
  • Need of Judicial reforms.
  • Need of market reforms in the agricultural sector.
  • Rural wages and credit needs to be improved for improving the consumption in rural sectors.
  • Bring investment into the economy and increase the consumption.
  • We need to concentrate more on the growth of domestic economy.
  • Give opportunities for private sector to pick speed.
  • Speed up the resolution of NPAs and a simplified bankruptcy framework.
  • Enhancing governance of public sector banks.

Thus it is clear that the economy needs to be addressed based on the ideology of reform, perform and transform in totality to overcome the current challenges of slowdown.