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‘Economy fundamentals are strong, 2nd half to be better'

At the Times Network’s India Economic Conclave-2019 North Chapter, ministers and govt officials say the slowdown is ‘cyclical’. The second half of this financial year is expected to be better than the first half as the economy recovers from a slow...

ET Bureau|
Oct 18, 2019, 08.55 AM IST
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IT, electronics and communications minister Ravi Shankar Prasad (File Pic)
NEW DELHI: The economy’s core fundamentals are strong and India is on track to become a $5 trillion economy by 2025, said top ministers and officials of the Narendra Modi government. The second half of this financial year is expected to be better than the first half as the economy recovers from a slowdown caused by reasons including impact of structural reforms undertaken by the Modi government and the crisis gripping the global economy, the officials said.

“The core foundation of the economy is strong and, as the IMF has said, India is expected to grow at a rate of 7% next year,” IT, electronics and communications minister Ravi Shankar Prasad said at the India Economic Conclave-2019 North Chapter event of Times Network. Minister of state for finance Anurag Thakur, minister of state in the Prime Minister’s Office Jitendra Singh and Niti Aayog vice-chairman Rajiv Kumar also spoke.

Prasad said the current slowdown was cyclical and the government had taken many steps to revive the economy and would take more if required. The decision to forego revenue of Rs 1,45,000 crore through tax cuts has had a positive impact on the country’s investment climate, the minister said. Thakur said the world’s GDP growth rate has been slashed to 3% from 3.8% amid issues such as the Brexit deal, the US-China trade war and the job crisis in countries such as Brazil.

Calling the current slowdown a “cyclical blip,” he said the government had taken several measures such as cleaning up of bank balance sheets and merger of state-owned enterprises that were long pending and these steps would help. “The Modi government added $1 trillion to the $1.7 trillion economy in only five years. We can certainly achieve the target of a $5 trillion economy by 2025,” he said.

According to Singh, who is also minister for development of the northeastern region, “If the country has to meet its target of a $5 trillion economy, then it will have to tap the untapped resources present in regions such as the northeastern states.” Singh added that there had been a 30% enhancement in the budget for the northeast during the Modi regime.

MK Anand, MD & CEO of Times Network, said, “India is an emerging superpower with a dynamic economic climate. With its large population and lower than average per capita output, north region is critical to India realising its growth potential. Correcting catch-up states, is our biggest national opportunity in the next five years.” Kumar of Niti Aayog said there is a need to develop blueprints for different regions within states. “Niti Aayog has identified 112 aspirational districts, which are the most backward, and if we can lift those, the national average will go up,” he said.

He said the Indian economy is transitioning from a phase of structural reforms such as a cleaner financial sector, goods and services tax and real estate regulation and development. “Yes, we are in a slowdown phase and we will be able to take off in the second half of 2019-20,” Kumar said.

Company executives such as Rajiv Talwar, MD of developer DLF, said the cost of borrowing needs to be further lowered and while the commercial sector is doing well, there needs to be a focus on the residential sector, which needs cheaper land and credit.

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