Highlighting the need for an upturn in private sector investments, the Economic Survey 2014-15 stressed the need for sustained reforms in the medium term to arrest the alarming rate of stalled projects and spur a revival in the manufacturing sector.
Tabled in Parliament by finance minister Arun Jaitley on Friday, a day ahead of the Union Budget, the survey suggested that the budget should continue the process of fiscal consolidation to sustain the momentum gained from lower oil prices and falling inflation.
“India’s overall revenue to GDP ratio for 2014 is estimated at 19.5% by IMF, which needs to move towards levels in competitor countries, estimated at 25% for emerging Asian economies and 29% for emerging market countries in the G20,” the government’s annual report card said. “India’s investment has been much below potential in the last few years. Stock of stalled projects have been rising at an alarming rate and is affecting the balance sheets of the corporate sector and public sector banks, constraining future private investments.”
For the first time, the survey also suggested the setting up an independent renegotiation committee, to do the clean-up job in cases of bankruptcy or asset restructuring, and involve external experts for a quick and independent resolution of the problems. “More than a run-up problem over exuberant and misdirected private investments, we face a clean-up problem,” it added.
The survey listed six recent initiatives including the ‘Make in India’ campaign, eBiz project and labour sector reforms undertaken by the Narendra Modi government to boost industrial growth. “The emphasis has been on rapidly improving ease of doing business and launching fresh initiatives like ‘Make in India’ and Digital India, creating a National Industrial Corridors Authority, streamlining environment clearances and labour reforms,” it said."Action has been taken to remove regulatory uncertainty," it added.