Economists suggest PM Modi for economic reforms: privatisation, banks recapitalising, tariff reduction

Last updated on January 11th, 2021 at 05:19 am

Economists suggest PM Modi: On Friday, India’s top economists in a meeting with PM Narendra Modi suggested him to incorporate few economic reforms in order to put the economy back on the path of growth. The virtual meeting was held weeks ahead of the annual budget submission, scheduled for February 1. It was attended by 16 economists including former Niti Aayog vice chairman Arvind Panagariya, former chief economic advisors Shankar Acharya, Ashok Lahiri and Arvind Virmani, former New Development Bank chairman KV Kamath and former RBI deputy governor Rakesh Mohan. 

Among the suggestions included shifting focus from challenging international arbitrary penalties to boosting investor confidence and moving towards privatisation, recapitalisation of banks, helping bad banks to address non-performing loans, labour reforms and increasing infrastructure spending. The country recently burnt its hands in Vodafone arbitration case, in September when international arbitration court passed a ruling against India for levying retrospective taxes on Vodafone Group.

One top economist even suggested that the Modi government could introduce a 10-year road map if the BJP leader wanted to transform his earlier announced target of making India a $10 trillion economy, into a reality. 

Few economists also urged the central government to reduce the fiscal deficit target in order to pump up infrastructure spending and push the pandemic-marred economy towards recovery. Some even proposed that the government could undertake disinvestment of its certain units, relax import tariffs in order to put India on the global supply chain.

Central government has been contemplating over measures to drive its the economic growth, especially after Thursday when the government released its annual economic predictions stating that in the current financial year the economy would contract 7.7%. 

Inside sources revealed that many economists in the meeting consented that in order to push the economy forward. They said that India needed more capital flow from outside and it should welcoming foreign investment as the country was not attracting enough funds.

One of the sources holding inside information over the matter said, “There is a need to boost investor confidence. Government should avoid challenging everything. This is important as investors are still wary of investing in India despite several reform measures.”

Another person, with access to inside information told the Economic Times, “Emphasis was on enhanced spending without bothering about the fiscal deficit at the current juncture, but presenting credible fiscal deficit numbers. This will help boost demand and consumption.” 

Besides, the economist also recommended the government to adopt an export-oriented model to encouraging the manufacturing sector and boost outbound shipments of the country. Some even suggested that India should join the Regional Comprehensive Economic Partnership.