“The growth slowdown we are experiencing is indeed quite serious. What is required now is a macroeconomic strategy to quickly revive aggregate demand in the short run, while initiating structural reforms over the long run. The strategy has to take into account a very challenging external economic environment”, Prof. Mundle remarked. The RBI has attempted to revive demand repeatedly cutting the Repo rate and taken other measures to ease the availability of credit. With monetary policy having limited edition, the main burden of growth stimulation must, therefore, fall on fiscal policy. Whenever issues of Public expenditure are discussed we often hear that there is no fiscal space to undertake this or that measure, added Prof. Mundle.
The Government now needs to muster the political courage to initiate deep fiscal reforms. Such reforms could create enough fiscal space to substantially increase pro-poor spending and revive growth while reducing the fiscal deficit and without an increase in tax rates. Finally, the balance of newly created fiscal space could be used for further fiscal consolidation, i.e., to reduce the fiscal deficit, he explained.
In the Panel Discussion Session, Mr. Rahul Bajoria, Chief Economist, Barclays Investment Bank laid focus on the Demand-Supply Management Perspective. “Economic measurement is below the par in true sense. It would be the turnaround of the Government to cogitate on-demand slowdown. The Govt. should put much concern on Structural Income, Efficiency of Public Sector Enterprises, Problem of Tax Structure apart from addressing Demand Slowdown”, added Mr. Bajoria. Mr. Piyus Garg, EVP & CIO, ICICI Securities said that consumption has slowed down while saving went down.
Mr. Sougato Bhatttacharya, Chief Economist, Axis Bank elucidated how GDP growth rate has been stunted. The role of foreign capital credit has to be effective. There should be a broader policy target, but in tandem, it is an extremely difficult task to chase that target, he said.
Mr. Pramod Kasat from Ex-Indusland Investment Banking highlighted on some key components of growth for which 5 factors play a very significant role. Having the largest number of young people in the world, India boasts of huge opportunities. Secondly, India has the world’s largest Mass Origination Movements, Technological Advancements, Mass Consumption, and Financial Inclusion. Commissioning of these five factors will lead us towards long term opportunity in a very strong way. Reforming Financial Market is very important. The government needs to focus more on the sector of Sustainable Energy, Mass Education, and Heath, in order to attain $ 5 Trillion Dollar economy, he added. Ms. Mythili Bhusnurmath, Consulting Editor, The Economic Times coordinated the Panel Discussion as the moderator.
The second-panel discussion was on the topic – “Known Terrain yet Uncertain Path: Challenges in Financing the Growth”. The panel comprised of Ms. Madhavi Arora, Lead Economist, Edelweiss Securities; Mr. Amit Tripathi, CIO, Fixed Income, Nippon India Mutual Fund; Prof. Arun Kumar, Chair Professor, Institute of Social Science; Mr. Sandeep Bagla, Associate Director, Trust Capital and Mr. R. Kannan, Head, CPM, Hinduja Group. The panel deliberated on the challenges to finance the growth. The discussions underlined the financial sector problems pertaining to NPAs, NBFC crisis and the resulting slowdown in credit off-take. The panel concluded that there is a tremendous scope to attract foreign savings to supplement the domestic savings that can lead to increased investment in the economy, especially in the infrastructure sector to feed the growth.
Earlier, Prof. S. N. Mishra, Dean, KIIT School of Management said that in India today there is an interesting amalgamation of political euphoria combined with efficiency. Prof. Hrushikesh Mohanty, VC, KIIT-DU welcomed the delegates and dignitaries and placed his view on Nation’s financial scenario in a nutshell.