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.
He said that the very first step before implementing the five reform measures is to accept that the country is facing an economic crisis. 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.
“We cannot deny that India is facing an economic crisis. Already, a lot of time has been lost. Instead of wasting its political capital by adopting a sector-wise piecemeal approach, or on monumental blunders like demonetisation, the time has now come for the government to carry out the next generation of structural reforms and promote sectors that can generate mass jobs,” Dr. Singh said.
Here are the five measures to put the economy on a high growth trajectory as suggested by Dr.Singh.
- GST should be made “logical” even though this would mean a revenue loss for a brief time.
- 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.
- There is a need to infuse liquidity in the system for capital formation. He said that not only public sector banks but NBFCs are also suffering.
- Revive 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.
- 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.
He pointed to his own record at steering the economy successfully, first as a finance minister and later as the PM. Blaming government for monumental blunders, he said demonetisation, followed by the faulty implementation of GST have triggered this slowdown.