The Union government lacks the wherewithal to immediately bring in a financial stimulus to revive the sagging economy, Niti Aayog Vice-Chairman Rajiv Kumar has said.
Growth-enhancing measures were the need of the hour to achieve India’s potential growth rate of 7-8 per cent per annum, he said in a newsletter ‘arthNITI.’
He attributed the current slowdown to low investment, muted consumption expenditure and lagging exports. Experts are divided over whether the government should provide stimulus to boost the economy without bothering too much about fiscal deficit.
“However, the government’s ability to finance a large stimulus is admittedly constrained. Therefore, attention will have to be on alternate measures to stimulate a recovery,” Kumar said in a newsletter ‘arthNITI’.
Niti Aayog’s vice-chairman noted that some green shoots of recovery were now visible with the Purchasing Managers’ Index (PMI) for both manufacturing and services showing a smart rise to above 52, which signified expansion.
He also said there have already been plenty of measures taken by the government in the recent past, including the decision to lower corporate tax rates in September 2019. “The equity markets have responded positively and strongly to these measures and recorded all-time highs.
Still, all eyes are now on Budget 2020 for further growth-enhancing measures,” Kumar said. Noting that growth, equity and sustainability can no longer be viewed as mutually exclusive, he said, “We cannot achieve one goal while neglecting the other two.”
Our policy design should, Kumar said, always have these three principle goals that are also enshrined in the Sustainable Development Goals (SDGs) or the Global Agenda 2030, for the achievement of which, all UN members have given their unequivocal commitment.
The Indian economy, which till recently was hailed as the fastest-growing major economy, has seen growth rate decline in each of the past five quarters, falling to over six-year low of 4.5 per cent in July-September 2019.
Finance Minister Nirmala Sitharaman will present Budget 2020-21 on February 1.
(With inputs from agencies)