It is impossible to not notice the optimism and cheers these days when you speak to any businessman, banker, or economist. Whether it is Keki Mistry of HDFC, Onno Ruhi of the World Bank, everyone agrees on one thing – the worst is over for the Indian economy. And the good times are just around the corner. Six months after Prime Minister Narendra Modi was sworn in, there is a sense that the Indian Economy has got moving after several wasted years. At home and abroad, the buzz about India has returned.
Indeed, businessmen have already started talking of expansion plans, fresh deals, and new projects. Ramesh Chauchan , CEO of Bislers, so enthused that he plans to put up one plant a month for the next 12 years. Bankers are getting ready to lend to new projects again. The stock markets have been scaling new heights. Consumer loans are in demand once again. Economists point to the improving macro-economic indicators- inflation has been reined in the Current Account Deficit (CAD) is down, FDI is picking up and foreign institutional money is flowing into the stock and bond markets.
The Union Minister Shri Arun Jaitley said that Indian economy has emerged as one of the fastest growing economies in the world with its GDP growth accelerated at 7.3% in 2014-15 compared to 6.9% growth in 2013-14 and 5.1% in 2012-13. Highlighting the contribution and importance of IT sector, Jaitley said that the government recognizes this sector’s potential and the IT sector is a key pillar in various flagship initiatives like Digital India, Make in India, Skill India as well as Start- up- India among others.
Due to post liberalization, subsequent Indian governments focused extensively on service sector, Indian economy is still in a state of recession. Service sector only generated employment for skilled workforce whereas low skilled workers were completely marginalized. Every year approx. 12 million people are added to existing pool of workforce and overwhelming majority is either unskilled or low skilled workers due to urbanization. Therefore, our dependence on service sector is responsible for ill state of an Indian economy and unemployment.
Although, Indian economy is going through a bad phase. Clouds of recession are still looming large. Sweeping economic reforms are need of hours to pull back economy from clutches of recession. Some measures which should be considered for the revival of the Indian economy:
1. Reduce Fiscal Deficit and CAD: These are deficits’, which if they persist, discourage foreign investors as well as throw the entire finances of the country into disorder and destabilize our external economic fundamentals.
2. Increasing diesel prices: A major factor contributing to the twin deficits is our dependence on crude oil imports. Pricing of petrol is fortunately already decontrolled and oil marketing companies have the freedom to increase petrol prices in tune with international prices. This alarming situation should be corrected by an immediate increase in diesel prices.
3. Dealing with the falling Rupee: All efforts by the RBI and the government have not been able to bring about correction in the sliding Rupee. The Rupee should be allowed to fluctuate and its own equilibrium in the foreign exchange market.
4. Legislative reforms: Important legislative reforms such as passing the pension and insurance bills, the Direct Tax Code and Goods and Service Tax Bill needs the special attention of the government.
5. Simplifying Rules and Regulations: there should be clarity in our economic legislations and tax rules.Further, rules and regulations should be simplified by the government.
It is commendable that in such a short period, Modi government has identified the reasons why the economy is in bad shape at the same time government has taken the right steps to bring Indian Economy back on track.
By Subodh Gajraj,
Writer – DU Times
