Five remedial measures can reverse the current slowdown, which is both structural and cyclic mainly because of the demonetisation debacle and faulty implementation of the Goods and Services Tax, former Prime Minister and economist Manmohan Singh said in an interview to a daily publication.
The very first step before implementing the five reform measures is to accept that the country is facing an economic crisis, he said in an interview Dainik Bhaskar, conducted in Hindi. The government must listen to experts and all stakeholders with open mind, he said adding that he does not see any focused approach by the Modi government on this matter.
“The Modi government should come out of the habit of headline management. Already a lot of time is wasted. Instead of making sectoral announcements, efforts should be made now to simultaneously take forward the entire economic framework,” he said suggesting five measures to put the economy on a high growth trajectory.
First, GST should be made “logical” even though this would mean a revenue loss for a brief time. Second, devise new ways to both, revive the agriculture and boost rural consumption. “The Congress manifesto mentions ‘concrete alternatives’, wherein money could reach in the hands of people by freeing agricultural markets,” he said.
Thirdly, there is a need to infuse liquidity in the system for capital formation. Fourth measure is to revitalise key labour-intensive sectors such as textile, automobile, electronics and affordable housing. For that easy loans would be required, especially for micro, small and medium enterprises (MSMEs), he said.
Singh’s fifth measure pertains to harness emerging export opportunities because of the ongoing tariff war between the United States and China. “We must recognise new exports opportunities emerging because of America-China trade war. Remember, solutions to both cyclic and structural problems are must. Then only, we can get back to the high growth rate in 3-4 years,” he said.
Commenting on the current state of the Indian economy he said the government cannot live in denial. “India is in extremely serious economic slowdown. The growth rate of 5% in the last quarter is lowest in the six years. Nominal GDP growth is also at a 15 year low. Many key sectors of the economy have been affected,” he said.
The automobile sector is in trouble because of a severe fall in output. More than 3.5 lakh jobs have been lost. This pain is visible at auto hubs in Manesar, Pimpri-Chinchwad and Chhenai. Ancillary industries are also affected. The slowdown in truck manufacturing is more worrying, which is a clar indicator of tepid demand of goods and essential commodities. The all encompassing slowdown has also gripped the services sector, he said.
The real estate sector is not able to perform well for quite some time, which is affecting related industries such as bricks, steel and electricals. Core sector has slowed after a fall in coal, crude oil and natural gas sectors. The rural economy is eclipsed because of non-remunerative prices of crops. The unemployment was 45 years high in 2017-18. Consumption, which is the reliable engine of economic growth, is 18 months low. A decline in sales of biscuit worth Rs 5 a packet has narrated the entire tale in its entirety, Singh said.
Sep 12, 2019 14:38 IST