View: As growth tapers, here's what can be done to revive the economy


FY2019-20 will go down as ‘annus horribilis’ in India’s economic trajectory. The drop in growth was so swift and so large that it can only be described as a crisis. India is now officially growing at a rate below 5%. At this ‘Hindu rate of growth’, India will not even reach $5 trillion by 2030.

GoI is under immense pressure to boost demand by breaching the fiscal deficit. It is, in any case, going to be difficult to meet the fiscal deficit target, despite the huge windfall transfer of excess reserves of Rs 1.76 lakh crore from RBI. The revenue projections in the Budget are based on very unrealistic nominal GDP projections of 12% growth — 4% GDP deflator and 8% real GDP growth.

More important is to reorient go nment expenditures towards a more developmental growth-oriented outcome — lower the recurrent expenditures and increase capital expenditures. Lower borrowing costs and cuts in subsidies could provide some space for this improvement in the quality of expenditures.

Recovery in investment is key to recovery of the economy. Gross fixed capital formation as a share of GDP peaked in 2007-08 at 36% — it has since declined to about 28.5% — with private investment peaking at around 27.5% of GDP in 2007-08, and now slumping to 21.5%. Credit to the private sector as a share of GDP also peaked in 2013, and has since fallen — a contrast with Vietnam and Bangladesh, where credit growth has continued to rise despite a slowdown in global trade, as these economies have maintained export growth.

2019- 2020财年将成为印度经济轨迹中“可怕的一年”。增长下降速度如此之快、幅度如此之大,只能用危机来形容。印度官方现在公布的增长率低于5%。按照这种“印度式的增长速度”,到2030年,印度甚至连5万亿美元规模的边都摸不着。




RBI has done its part to some extent. It has, over the last year, lowered the repo rate by 135 basis points to 5.15%. But only a third of this cut has translated into lower lending rates by commercial banks. Further cuts in RBI’s repo rate are unlikely, as consumer price index (CPI) inflation has now jumped to 4.6%, implying a real repo rate of 0.55%, lower than is warranted.

RBI’s Monetary Policy Committee (MPC) has reduced the repo rate by 135 basis points since last year. But it has had no effect on the weighted average lending rate (WALR). Over the last year, WALR has gone up by 1.9% points. In general, since the establishment of MPC in 2013-14, WALR has jumped from under 2% in real terms to around 7% for outstanding loans and 6% for new loans.


自去年以来,印度央行货币政策委员会已将回购利率下调了135个基点。但这对加权平均贷款利率没有影响。总体而言,自2013- 2014年货币政策委员会成立以来,实际利率已从2%以下跃升至7%左右,新增贷款为6%。

Pressure to come clean on NPAs — no doubt badly needed — forced banks to increase their lending rates and hurt economic growth, via both the consumption and investment channels. The high real interest rates has also meant that the real exchange rate remains hugely appreciated — by around 15-20% over the last five years. Such a high real exchange rate has hurt India’s competitiveness. The cost of not setting up a bad bank and conducting bolder financial sector reforms has now come to bite the system.

Trade wars have added to the global slowdown. Nevertheless, the US-China ‘trade war’ was seen as an opportunity for several countries. So far, the biggest winner is Vietnam and, to some extent, Bangladesh. India seems to have missed the bus due to lack of competitiveness. Vietnam’s exports to the US have jumped by about 30%. It has seen huge inward investment from Hong Kong-based companies. India’s decision to not join RCEP may also make it a less attractive destination for firms leaving China.

India has moved up again on the World Bank’s ‘Ease of Doing Business’ rankings to 77th position. But it remains behind Vietnam, Indonesia, Thailand and Malaysia. India dropped 10 ranks to 68th on the broader World Economic Forum (WEF) Competitiveness Index, which incorporates the ‘Ease of Doing Business’ index, but includes other factors as well.

This suggests India will need to conduct more aggressive reforms in enforcement of contract, registering property, paying taxes and resolving insolvency, as well as conduct labour and financial sector reforms. The following will be needed to accompany the corporate tax cuts to boost investment:






*Set up a bad bank, and privatise some State banks. Insolvency and Bankruptcy Code (IBC) is a good reform, but too slow to deal with the systemic non-performing assets (NPA) problem.

*Labour flexibility for firms up to 500 workers.

*Liberalise agricultural markets and exports, and boost rural demand by shifting funds to PM-KISAN and MGNREGA by reducing electricity and fertiliser subsidy.

*Announce a new strategic trade and industrial policy, and select 8-10 industries for priority support, as was the case earlier for auto and pharma.

*A new tourism push, ‘Swagat India’, to match ‘Swachh Bharat’, to double arrivals in 10 years.

*Direct tax reform to complement corporate tax cut and widen the base.

*Aggressively consummate disinvestment, including Air India sale and Bharat Petroleum Corporation Ltd (BPCL), Shipping Corporation of India (SCI) and Cement Corporation of India.


* 为500人以下的公司提供用工灵活性。



*新的旅游推广“Swagat India”,与“Swachh Bharat”相配套,使游客数量在10年内翻倍。




译文来源:三泰虎     http://www.santaihu.com/48867.html      译者:Joyceliu



I think Narendra modi should resign because he has proven to be an incompetent -uneducated prime minister of india.He was never fit to be PM but was appointed by reliance-adanis. Modi-the accidental prime minister..Please resign if you are a deshbhakt and vanish from india



Ramesh Shah

There is nothing left to stitch in time EVERSINCE the Demo N SUBSEQUENT GST MASSIVE drawback has made a full pant to half pant...!!??? now the ECONOMIES must go in right Economists hands..... shocks after shocks no stitch in time!!!



Anand Deshpande

Reducing repo rate will not help, it is trust deficit which needs improvement. People and industry should feel confident about future then only growth will be there.



Feku Maharaj

Fekuji unleashed war on middle class by innumerable taxes, cesses and penalties on everything that moves. So people are left with no money for consumption.



Kavi Tanna

Taxes for middle class have collapsed. Never before have they been so low. Income tax exemption was raised. GST lowered insane tax levels under previous Scamgress re gie. GST replaced 14 different taxes on the consumer.



Ajit Grewal

there is no need for Sitharaman bahen to do anything - she has already proved her credentials as the fastest growing indian economic genious in the world . all this talk about the economy slowing is simply propaganda of the opposition . look at the airports - roads - homes - taxis - people everywhere



Kishore Shivani





Good joke pro Govt editors



Rahul Seshadri

I take strong objection to the statement Hindu Growth Rate. Can even an article on the economy not be written without bringing religion into discussion




Has anyone seen rise in withdrawals from EPF?I am getting reports that people are removing EPF money at higher rates



Venkatesh Srinivasan

Burdening people with tax of all names should stop if we have to see growth. We have reached a stage where any further rate cut by rbi will make it''s impact. Banks are fearful of lending. They can''t reduce deposit rates for fear of withdraws.




That is typical of modi govt to burden taxpayers with more taxes in name of hindu deshbhakti so modi can pay his lavish foreign vacations,salaries to govt babus-judges and huge contracts to adanis-ambanis,payments to buy MP-MLA,and media.



Kanakasabhai Natarajan

Another article from a person living in the US without understanding ground realities. The growth was achieved by reckless lending during congress re gie resulting in NPA mess now running to almost 40 lakh crores. All tourist centres are full, trains have no tickets for months,pilgrim centres like Sabarimala, Tirupati, Madurai etc. are full of domestic tourists. India has its own growth momentum of around 5% and we can not have 8-10% like China which exploited export trade. We should simplify system and ask banks to lend to good customers who have deposits, good credit score to boost demand for goods. Raise 2nd class train fares, cut unwanted subsidies, pay dividend on dud banks with special fund while reviving them, buy back low priced PS shares and not sell are some measures.

这又是生活在美国的人写的文章,他不了解基本的现实。这一增长是通过国会时期不计后果的贷款实现的,导致了不良资产混乱,现在已经达到近400亿卢比。所有的旅游中心都是满的,火车已经几个月没有票了,像Sabarimala, Tirupati, Madurai等的朝圣中心都挤满了国内游客。印度有自己5%左右的增长势头,我们不能像中国那样利用出口贸易的8-10%。我们应该简化系统,让银行贷款给有存款、有良好的信用评分的好客户来刺激商品需求。提高二等火车票价,削减不必要的补贴,用特别基金向问题银行支付红利,同时重振经营,回购低价的PS股票,这些都是一些措施。



You moron bhakt,India was growing at 9% per annum without fudging statistics and employing paid bhakts to comments under congress era.India has 130 crore population and everything is always crowded. You go to any place bus stand,railway station,malls etc and you will see people.That does not mean they are earning crores like Modi''s masters ambanis-adanis.



Kavi Tanna

Id rather grow at 5 percent with sustainable growth rather than Donald Trump style unsustainable nonsense. Scamgress artificially inflated MSPs to ridiculous levels, massive scams, high fiscal deficits, destruction of BSNL and Air India, destruction of infrastructure companies, 100 percent dole politics, wasted 70 years of nothing.



Kanakasabhai Natarajan

You ignorant b. Crowd is not local but from far off places paying hard earned money. Tirupati doesn’t appear before you. Flipkart and Amazon had $6 b in sales this Diwali but then you may not know what is a billion dollar. When the whole world is struggling with recession 5% growth is not something to cry about which you the Congress chamcha do. One can’t allow co ption at all levels, ask banks to lend recklessly and import everything just to show fake growth.



Hemant Pisat

It all actually started in mid 2015 when banks were asked to coerce customers on delayed debt resolutions and forcing MSME''s restructure business loans despite healthy debt servicing. MSME''s were slowly cornered, while demonetisation & shoddy GST rollout humbled them to non entities, thereby losing steam on a large premise with a stressed economic conditions. This had led to unemployment, paucity of demand, consumption and later credit lifts driving all industry spectrum in its whirl. Then came the saga of artificial numbers, irrelevant analysis, unintelligent policy statements, denial modes, direction less budget announcements, market exits & comeback begs, unwarranted tax concessions to unlikely contributors and what not. The list is endless.




The Feku rate of growth is much worse than the Hindu one because, at least, the GDP figures were reliable and trustworthy back then. It is safe to say that India is already in a recession according to the latest IIP, electricity production and fuel consumption. If Feku keeps on manipulating all kinds of numbers, the doomsday is coming to India soon.



Kavi Tanna

I dont remember reading such articles daily when UPA posted 2 years of 5 percent growth.




Replying to a know-nothing clown like him is a waste of time and space. The clown doesn''t even remember that the UPA managed the Indian economy through years of a global recession.



Kavi Tanna

Global growth now is actually lower than 2008. This site just printed an article about it this week. Also the years I referred to are 2011 and 2012 for 5 percent GDP growth under Scamgress, not 2008.



Office Mails

Even a majority go nment cant increase GDP, what about coalition go nment? zero reforms.



Kavi Tanna

Govt should adopt Scamgressonmics and massively increase farmer crop prices then farmers will produce more generating rapid GDP growth. Do not worry about surplus food rotting and skyrocketing inflation, this will be next govt''s problem.




hell with economy. let us get political gains. single point. why nobody understand it.



Balasubramanian Sankaran

The majority of the People of India were easily duped by the empty promises of the BJP, which swore that it would usherin an era of transparent , corrup-free and progressive re gie with catchy slogan of "Ache Din".Now it is painfully clear that beginning with the ill-planned and unwarranted Demonetisation Fiasco and the shoddy implemenatation the the GST, the slide in our Economy had clearly started within six months of the BJP coming to Power in 2016.The naive public were so deceived by the periodic and ineffective "surgical stikes" Now with the massive mandate of 2019 from the unsuspecting and naive public, the future of our great country is unfortunately under the control of an unaccountable, arrogant and unwise re gie. God save us all!



Aishvaraya Gupta

Modi deserves lynching for economic disaster that he cooked for India with series of missteps




As long as Fekunomics is practiced in India, growth will not revive.




The humongous factory-business closures and drastic loss of demand in all sectors plus instability brought due to NBFS-Banking-stock market can not be re-mediated just by rhetoric of hindu deshbhakti




There is not going to be any boost in demand due to modi''s vicious war against workers and middle classes on behest of selected business dynasties and govt babus.I have seen people removing money from PF account and banks due to extreme instability propagated by modi''s misgovernance.Since modi is following two ideologically opposing models at same time(chicago school of economics for ambanis adanis bureaucrat controlled com ism for masses);it will end up destroying purchasing power of people and stop growth


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