One of the biggest problems the economy is facing is lack of growth. Gross domestic product (GDP) estimates have been brought down across the board by economists. The government has not been able to find the money to pump-prime the economy. The goods and services tax (GST) collections were lower in October compared to October in last year by about Rs 5,000 crore.
With the second-quarter GDP numbers set to be released on November 29, here’s a look at what experts have to say about India’s growth story:
Suyash Choudhary, head-Fixed Income, IDFC MF:
“We have tried to qualify the problem and at the gross value added (GVA) level, now the growth dynamics are reminiscent of the 2008-2009 cycle, although we are not as bad, we are close. One has to look at which agent can provide a depth of response, which is equivalent to the size of the problem and the three agents here are the Government of India, the intermediaries, which is the banking and the non-banking financial companies (NBFCs) sector and finally the Reserve Bank of India (RBI),” said Choudhary.
“If we look at the net effective fiscal deficit… it is in the vicinity of 8.5-9.5 percent of the GDP,” he added.
Ananth Narayan, professor at SPJIMR:
“I agree that the actual fiscal deficit or the actual borrowing being done by government and government-owned entities are at multi-year highs. It is at the highs of this particular decade. I think it is over 9.5 percent of GDP… there is nothing wrong with the fiscal deficit if the country is growing at 10-12 percent, you can continue to borrow at 6-8 percent as long as it is going towards productive investments. That is not the case as things stand right now,” said Narayan.
Narayan, however, said the government is “on the right track to address some of these issues”. “To me, the biggest issue or the biggest remedy, which could be pursued, is bringing in foreign direct investment (FDI), particularly manufacturing FDI. I think the FDI route being pursued is far better than trying to increase the debt portion,” he further mentioned.
Pronab Sen, former chief statistician:
“We are looking at a combined fiscal deficit of over 9.5 percent. The heart of it is an issue where the government is simply not paying off its creditors, it is not paying the states, it is not paying its suppliers, it is not giving tax refunds… everything is underfunded, the government is not putting the money out… the action should really be for the government to issue bonds, put money where it owes them,” said Sen.