The government is taking bold initiatives to facilitate a shift to a
rule -bound and trust based system of economic management in the country from a
rent-seeking and patronage based society prevailing at present. The recent
reform measures such as demonetisation, introduction of GST, bankruptcy law,
and RERA, among others, should be seen in this context, said Mr Sanjeev
Sanyal, Principal Economic Advisor, Ministry of Finance. He was speaking at an
interactive Panel on Building Blocks for a New India, at the India Economic
Summit being organized by the World Economic Forum and the Confederation of
Indian Industry (CII) at New Delhi today.
While acknowledging the slowdown prevailing in the Indian economy, Mr
Sanyal said that the current GDP numbers are not the only marker of our
economic performance. Our strong macroeconomic fundamentals such as robust
forex reserves, low current account deficit, benign inflation, etc lend
stability to our economy. The Government is also looking at fixing the
problems relating to employment data.
Mr. Sanyal stated that the government is looking at options such as
issue of recapitalization bonds or diluting government stake in PSBs for
recapitalization of banks. He also mentioned that the number of banks may come
down within the 10-15 range from around 22 at present as part of the effort at
bank consolidation. There is scope for both the public sector and the private
sector banks to co-exist as both have different risk-return profiles.
Ms Shobana Kamineni, President, CII stated that both demonetisation and
GST would eventually help towards formalization of the Indian economy. Going
forward, the government should continue to work on ease of doing business
reforms, persuade states to improve the investment climate and help fix
physical and social infrastructure.
Mr Adi Godrej, Chairman, The Godrej Group, said that GST is a
landmark and game-changing reform which would yield significant benefits in the
long run. He further mentioned that the subdued Q1 GDP growth rate is
essentially the result of de-stocking undertaken by trade during the month of
June as the GST rate for manufacturing was expected to be below that of excise
and VAT. He added that going forward, growth figures would improve during
July-September and rebound further in the second quarter of this fiscal.
Learning from past experience, companies should rely more on equity than on debt,
which is now happening with more companies going for IPOs. Moreover, improving
efficiency in land use should be a priority for the government.
Mr Sanjeev Bajaj, Managing Director, BajajFinserv, while lauding the
government for its action-oriented approach, said that that the return on
equity (ROE) is presently high in the country on account of high cost of
capital, high cost of doing business and the economy being on the growth path.
Once the Indian economy matures, the ROE would fall which would mean that our foundation
has become stronger. He also called for reforms in labour laws to promote
October 6, 2017