Economists can’t deny that everything does appear perfect on the country’s economic front. A kind of fear prevails and what is cautiously avoided is taking harsh steps, though the effort to give life to the ailing sectors is also on the line. However, Finance Minister Nirmala Sitharaman has injected well-conceived corrective measures to improve the economy’s deteriorating health due to the apparent slowdown. This bleak situation tensed the RBI governor Shaktikanta Das so much that he talked of linking lending rates with the repo rate and also improving the transmission of policy rates and fostering growth rate. The policy rate is the same repo rate instrument of Reserve Bank of India.
The recommendations of the RBI’s monetary policy committee brought repo rate to 5.40% in August. The GDP rate has also been brought down to below 7%. The concerning matter is whether we stand at a growth rate of 7% or 6%. While Bibek Debroy, Chairman, PM’s Economic Advisory Committee tried to find out whether this slowdown was cylindrical or structural. On the fiscal front, he avoids hasty steps for the concessions to specific sectors.
In a bid to boost the economy on a five-year slowdown, various measures were announced. Starting from the rollback of surcharge of foreign and domestic equity investors, a timely review on super-rich tax on high net worth individuals, exempting startups from angel tax, a package to address distress in the auto sector and finally to upfront infusion of ₹70,000 crore to public sector banks.
Much experienced ex-President Pranab Mukherjee wanted more clarity on GST, more investments, control on inflation as well as an effective check on the astonishing frequency of corporate frauds.
Meanwhile, S. Swamy, whose book on the economy will be launched in the next month, suggested three major steps for strengthening the economy that is the abolition of GST, hike in the interest rate on savings to 9%.
Are these steps aimed at super economic growth? Will these measures help boost the economy? Sure, it will. If the budget proposals do not work, all the tamasha for the budget announcements will only remain as a customary exercise.