Growth Slowdown, Reforms and Recovery
Indian economy has slowed for 6 consecutive quarters till July-Sept 2019. This decline was broad based, covering both private consumption and investment and led by manufacturing (including Automobiles). The first four quarter decline during 2018-19 mirrored what happened during 2016-17, from which the economy recovered quickly in 2017-18 (V shaped recovery). The current deceleration has already stretched into 2019-20 taking the number of declining quarter to 6, with few signs of an upturn. The recovery is therefore likely to be slow & prolonged (U shaped), unless policy steps are taken to accelerate it. This note outlines the policies needed to promote quicker recovery of GDP growth to its full potential. The next section outlines the legacy of corruption and Non-Performance assets left by the previous Govt. Section 3 outlines the institutional changes which designed to modernize the economy in the medium-long term, have affected the economy negatively in the short-medium term. Section 4 provides the policy solutions to rebalance the economy by moving policy attention from suppressing the Black economy towards promoting the White Economy, giving a boost to “Make in India” and entering, Global supply Chains, to drive employment intensive growth in the next 5-10 years. Section 5 concludes the note.
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