growth path

Source: The Hitavada      Date: 31 Jan 2018 10:33:13

ALL the concerns and criticism of handling of economic policies by the Narendra Modi-led Union Government should now be immediately put to rest after the Economic Survey’s prediction of a 7-7.5 per cent growth of Indian economy in 2018-19. The Economic Survey once again affirms India as the world’s fastest growing major economy. That the economy is in pink of health is a testimony to the careful and thoughtful handling of major policies including the aftermath of demonetisation and rolling out of Goods and Services Tax (GST).

The survey has pegged the GDP growth for the current fiscal at 6.75 per cent predicting rebound of exports and private investments. It bodes well for the national economy as it would be a major boost to creation of new jobs. Though the survey has hinted at a pause in fiscal consolidation in the next year, it is part of a long-term process to keep the economy on fast track.

Indian economy is rich and complex but it also provides ample opportunities to recapitalise. That it stood firm in the face of a global recession a decade ago speaks of Indian economy’s robustness. It has always enjoyed strong fundamentals. The present Government did extremely well to rectify the fundamentals. If the ongoing reforms are stabilised and if the world economy remains buoyant then growth could touch the potential of at least 8 per cent.

The prediction of 7.5 per cent growth points to the stabilisation and waning of the after-effects of demonetisation and implementation of GST. Both the major policy decisions were bound to have a ripple effect on formal as well as informal sector. But with an all-inclusive approach to accommodate concerns and benefits of all stakeholders the Government has managed to tide over the aftermath quite effectively. Both the decisions have resulted in widening of tax base and bringing out black money component in the economy. The success of Jan Dhan Yojana is a certificate of inclusiveness of all sectors in the national economy. Though there were incidents of stacking of huge amount in Jan Dhan accounts, those were minor aberrations pointing to the insecurity of black money holders.

While the prediction of growth is certainly a reason to celebrate the survey has also flagged some areas of concern. Crude oil prices and elevated stock prices could play game-spoilers in the growth story. Then there are areas like agriculture, climate change, education and rural economy that need to be shored up with a calibrated approach.

Rural economy, small and medium industries need to be taken care of with a sustained backing if the economic growth is to see an upsurge. Agriculture has to be the planners’ focal area. Loan waivers and taking burden of debts of power companies should be done away with by the State Governments even at the cost of political benefits. Since the general elections are round the corner, there might be a temptation to roll out sops for electoral gains. Instead, pragmatic steering between various extremes and modest consolidation of gains should be the key factor for the future course.

The uptick of growth percentage is an assertion of India’s growing clout among world powers. The United States is viewing South Asia with a wider aperture to include India as one of the bookends. As the world economy witnesses a steady rise out of dormancy, India is being seen as a major partner by big economies.

The opening of foreign investment is also a much-needed reform India has ushered. It will bring in benefits in gradual course. The signs of upturn are visible and are likely to be aided by exports. That is a good reason for optimism.