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Economic Survey 2018-19 a blueprint to achieve Prime Minister's vision for 5 trillion-dollar economy by 2024-25: FICCI

Jul 04, 2019

Economic Survey emphasises the need to shift gears to accelerate the GDP growth to 8 per cent: Sandip Somany, President, FICCI


NEW DELHI, 4 July 2019: The Economic Survey 2018-19 tabled today in Parliament provides a blueprint to achieve the Prime Minister's vision for 5 trillion-dollar economy by 2024-25. It clearly emphasises the need to shift gears to accelerate the GDP growth to 8 per cent if that vision is to be achieved.

"FICCI completely agrees with the prognosis of Economic Survey that identifies the need to foster inter-linkages to meet the macro challenges of growth, demand, exports and job creation and these will have to be driven through investments, especially private investment. By viewing these challenges as complementary to each other, the Economic Survey provides an appropriate policy direction that the government should adopt to achieve the goal of sustained growth and development. We hope that tomorrow�s Union Budget will accordingly present proposals that can resolve the current economic challenges holistically," said Mr Sandip Somany, President, FICCI.

"Though the GDP growth projection as per Economic Survey for 2019-20 at 7 percent is amongst the highest in world, yet it is lower than the desired growth of 8 per cent plus required for achieving the goal of 5 trillion-dollar economy. Strengthening investment cycle has to be the topmost priority and we hope that the Union Budget will provide specific measures to boost investment, consumption and savings rate in the economy. The deceleration in these three key parameters over the last few years has been the reason behind growth moderation and there is a need to revive these for building the growth momentum going ahead," said Mr Somany.

The Economic Survey has noted an improvement in the performance of the banking sector with a decline seen in the NPA ratios and recoveries through the IBC process. At the same time, the Economic Survey has highlighted that the liquidity situation continues to remain tight and financial flows remain constrained. "FICCI is of the opinion that the flow of finance to the productive sectors must continue unhindered to facilitate the growth of private investment. Government must look at measures for improving the liquidity scenario in the financial sector, particularly in the NBFC segment. It is imperative to bring down the cost of capital for businesses through a complete transmission of the policy rate cuts," added Mr Somany.

"The Survey proposes reduction in economic policy uncertainty to foster a sustainable investment climate. It suggests having consistent policies with forward guidance, which has indeed been advocated by FICCI for a very long time. We hope that a concerted policy approach with such overarching guideline will be adopted at all government levels. This is key to strengthen the trust between government and industry, and hence to give a boost to animal spirits of businesses in the economy," said Mr Somany.

As regards building the fiscal capacity, the survey identifies the key priorities as broadening and deepening the direct tax base and stabilisation of goods and services tax. It also emphasises on improving the quality of expenditure. Acknowledging that Budget 2018-19 was presented with an optimistic investment and trade scenario, the survey states that the Government has been able to contain the fiscal deficit at 3.4 per cent of GDP through compression of Government expenditure. "Given that there will be challenges of slowing growth with attended impact on revenues, we feel that this should not lead to a compromise on the productive and developmental expenditure, even if this means a slight recalibration of the fiscal deficit target," stated Mr Somany.

The survey suggests reorienting policies to enable growth of MSMEs and encouraging small firms to grow bigger in scale and size. This is critical for enhancing global competitiveness of Indian industry. "FICCI has for long advocated deregulating the labour law restrictions. Flexible labour market provides an enabling environment for growth of industry and greater job creation. We thus hope that the Government will speed up the process of labour law reforms and provide the much-needed flexibility to employers. Further, the suggestion to recalibrate Priority Sector Lending guidelines for direct credit flow to young firms in high employment elastic sectors is also noteworthy and government should consider it," said Mr Somany.

On the agriculture front, the survey suggests a shift in focus from land productivity to 'irrigation water productivity' through greater thrust on micro-irrigation. It also recommends adoption of organic and natural farming techniques including Zero Budget Natural Farming to improve water use efficiency and soil fertility. These suggestions are in the right direction and we look forward to adequate budget allocation in these areas in tomorrow's Budget.