NITI Aayog Chief Executive Officer Amitabh Kant on Friday said a spate of reforms undertaken by the government had led to the current slowdown in the economy, The Hindu reported. Kant advised the government to push for major structural reforms as was done earlier.
“One of the reasons for the slowdown is that it has had too much of reforms – GST [Goods and Services Tax], IBC [Insolvency and Bankruptcy Code], RERA [ Real Estate Regulatory Authority] – a huge set of reforms which we have undertaken and I think the next round of reforms must revolve around sectors like oil and gas, mining, coal,” The Hindu quoted the policy think tank chief as saying.
Kant advocated a series of policy decisions to revive the economy while speaking at the Bloomberg NEF summit in New Delhi. “Firstly, you need to bring in greater levels of liquidity,” he said. “Secondly, you need to revive the animal spirit of the private sector, you can never create wealth without the private sector. Thirdly, the government needs to get out of business in a range of areas and you need to recycle a lot of government assets such as roads. Fourthly, we must push for major structural reforms as we did earlier.”
The NITI Aayog chief suggested that gas grids, pipelines, transmission lines should be privately owned. He said the think tank had recommended a vast range of public sector units should be privatised. Bank credit would automatically start flowing once private sector is brought in, Kant added. He said the country must commercialise coal mining and railways to push forward growth.
Banks are reluctant to lend, says HDFC chairperson
Housing Development Finance Corporation’s Chairperson Deepak Parekh on Friday said there was a distinct slowdown in consumption but added it was temporary as there was adequate demand for assets across the country, PTI reported. He said the slowdown was compounded with the tight liquidity situation that has prevailed since September.
“While there has been an across-the-board slowdown in consumption, given the inherent demand and low penetration levels, I believe this is temporary in nature,” Parekh told shareholders at the firm’s 42nd annual general meeting in Mumbai.
He said the slowdown in the economy was reflected in the lower Gross Domestic Product growth of 6.8% in the current financial year. “Banks are reluctant to lend and there has been a flight to safety where a select, few, high rated NBFCs and HFCs have access to funding, while for several others, access to credit has been chocked,” PTI quoted him as saying.
Parekh said he was hopeful that the situation would turn normal by the start of the festival season. “Some of the risk averseness should taper off,” he said. “To my mind, what is critical is reinstilling confidence in lenders to support growth in the economy.”
These comments came after Larsen & Toubro Chairperson AM Naik said India should feel lucky even if Gross Domestic Product grows at 6.5%. He said the situation was challenging on data credibility, and advised people to use their own judgement while looking at official numbers.
Economic growth slipped to a five-year low of 5.8% in the January to March quarter. This was the slowest pace of growth in 17 quarters. A number of economists have raised questions about the methodology of assessing official growth numbers.