Growth of India's gross domestic product (GDP) - the value of all goods and services produced in the country - crawled at 4.7% in 2013-14, confirming the spread of a crippling slowdown. What are the five simple steps to revive India's sagging economy? Read on with HT to know the answer.
Health of Indian economy in numbers
India's GDP growth during 2013-14, marginally higher than last year's 4.5%. This is the first time in 26 years after 1987-88 that India's GDP has grown at sub-5% in two successive years.
India's GDP growth in January-March. In the last seven out of eight quarters, India's economy has grown at sub-5%.
The manufacturing sector contracted (-) 0.7% in 2013-14 against 1.1% in 2012-13.
Growth in agricultural output. It is up from 1.4% last year, but deficient monsoon rains could push up inflation and hurt farm income.
The growth in services sector including construction in 2013-14. It is marginally higher than last year's 5.6% growth, but sharply lower than the 10-year average of 9% growth.
Per capita or average income of an Indian in 2013-14 at current prices, up from Rs 67,839 last year, a 9.6% growth.
Five steps to revive growth
Factories are producing less, companies are offering fewer jobs and prices continue to remain high. Urgent steps are required to halt the slide in the economy, which until recently, was an engine for global growth. Here are five steps that can be taken to revive growth:
1) One of the surest ways to revive a sagging economy is to prompt households to spend more. When high prices prevail, the best way to achieve this is by giving more money in people's hands through tax breaks. A timeline for introducing the Direct Taxes Code (DTC) can be a good first step.
2) Introduce urgent reforms in agriculture - India's most unreformed and least productive sector. A third of fruits and vegetables rot because there is no storage. At least 25% more farmland can be irrigated if infrastructure advancements such as feeder canals are made.
3) A pan-India goods and services tax (GST) could save billions of dollars, cut corruption and boost economic growth. It will stitch together a common national market by replacing a welter of levies such as excise and octroi with a single tax.
4) It's critical to fast-track roads, ports, airports, and railways projects to create jobs and raise non-farm incomes. Thrifty households can be the primary financiers to build India's collapsing infrastructure if Parliament clears the bills relating to pensions and insurance.
5) It's critical to unveil a clearly-defined policy on land acquisition to catalyse large-scale industrialisation across India. The 1,483-km long Delhi- Mumbai Industrial Corridor and a few other such projects should be accorded highest priority which can potentially spin millions of jobs.