‘GDP growth rate to be 4.8-5.5% in 2009-10’
The Hindu Business Line, March 25, 2009, Page 5
Global slowdown has dealt severe blow: ICRIER.
K.R. Srivats, New Delhi, March 24
The country’s GDP growth rate for 2009-10 might be in the range of 4.8 to 5.5 per cent, the Indian Council for Research on International Economic Relations (ICRIER) has said, reflecting the likely intensification of domestic economic slowdown.
In a working paper, Indian Economic Outlook 2008-09 and 2009-10, the economic policy think-tank has attributed the lower forecast for the next fiscal, when a new Government assumes office, to the impact of the worst economic downturn since the Great Depression.
For the current fiscal, the GDP growth has been pegged by ICRIER at 6.3 per cent, lower than the projected 7.9 per cent in a “no-shock” situation.
This GDP forecast comes close on the heels of the International Monetary Fund’s projection that India’s GDP growth will slow down to 6.25 per cent in 2008-09 and 5.25 per cent in 2009-10, in the wake of “deteriorating global outlook”.
Global blow
ICRIER has noted that the global crisis has dealt a severe blow to investment sentiments and consumer confidence in the economy. The crisis would also deepen and prolong Indian economy’s slowdown, according to the think-tank.
The basic question is how long it will take to revive the investment and consumer demands, which are falling precipitously, says the ICRIER paper.
It noted that fiscal and monetary expansionary steps at a time of extreme uncertainty worldwide will have limited impact.
A better way of responding to the crisis is the often repeated and now a cliché of kick-starting the “second round of reforms,” which was long overdue.
India has to substantially relax its “permit and approval” system by carrying out procedural reforms that will improve the investment climate for domestic and foreign investments.
Also, India ranks low among countries on regulatory environment with regard to enforcement of contracts, payment of taxes, business closure, licensing, property registration and setting up of business (World Bank, 2008). Reforms in these areas would be much more effective than just packages of monetary and fiscal stimuli to restore investor and consumer confidence, the ICRIER paper said.
While monetary and fiscal stimuli may provide the short-term palliatives for shoring up GDP growth, the real push will only come from implementing structural reforms, the agenda for which has been put on the shelf for a while.
“We cannot hope to generate the needed economic activity or the employment levels by continuing to tinker around with the economy. Bold and visionary measures, such as those undertaken in the early nineties, are needed again if the economy is not to slip into a prolonged phase of anaemic growth,” says the paper.
The Hindu Business Line, March 25, 2009, Page 5
Global slowdown has dealt severe blow: ICRIER.
K.R. Srivats, New Delhi, March 24
The country’s GDP growth rate for 2009-10 might be in the range of 4.8 to 5.5 per cent, the Indian Council for Research on International Economic Relations (ICRIER) has said, reflecting the likely intensification of domestic economic slowdown.
In a working paper, Indian Economic Outlook 2008-09 and 2009-10, the economic policy think-tank has attributed the lower forecast for the next fiscal, when a new Government assumes office, to the impact of the worst economic downturn since the Great Depression.
For the current fiscal, the GDP growth has been pegged by ICRIER at 6.3 per cent, lower than the projected 7.9 per cent in a “no-shock” situation.
This GDP forecast comes close on the heels of the International Monetary Fund’s projection that India’s GDP growth will slow down to 6.25 per cent in 2008-09 and 5.25 per cent in 2009-10, in the wake of “deteriorating global outlook”.
Global blow
ICRIER has noted that the global crisis has dealt a severe blow to investment sentiments and consumer confidence in the economy. The crisis would also deepen and prolong Indian economy’s slowdown, according to the think-tank.
The basic question is how long it will take to revive the investment and consumer demands, which are falling precipitously, says the ICRIER paper.
It noted that fiscal and monetary expansionary steps at a time of extreme uncertainty worldwide will have limited impact.
A better way of responding to the crisis is the often repeated and now a cliché of kick-starting the “second round of reforms,” which was long overdue.
India has to substantially relax its “permit and approval” system by carrying out procedural reforms that will improve the investment climate for domestic and foreign investments.
Also, India ranks low among countries on regulatory environment with regard to enforcement of contracts, payment of taxes, business closure, licensing, property registration and setting up of business (World Bank, 2008). Reforms in these areas would be much more effective than just packages of monetary and fiscal stimuli to restore investor and consumer confidence, the ICRIER paper said.
While monetary and fiscal stimuli may provide the short-term palliatives for shoring up GDP growth, the real push will only come from implementing structural reforms, the agenda for which has been put on the shelf for a while.
“We cannot hope to generate the needed economic activity or the employment levels by continuing to tinker around with the economy. Bold and visionary measures, such as those undertaken in the early nineties, are needed again if the economy is not to slip into a prolonged phase of anaemic growth,” says the paper.
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