Top economic adviser to PM casts doubts on 7% growth

The top economic adviser to Prime Minister Narendra Modi Monday became the first among the serving policy advisers to cast doubt on India's economic growth of 7% this year as projected by the government.

Chairman of Prime Minister's Economic Advisory Council (PMEAC) Bibek Debroy said India's economy this year could barely grow at 6% and not 7%, given where the things stand now.

“If one contrasts 2017-18 with 2018-19, there have been no remarkable changes in the growth components of consumption, government expenditure, investments and net exports.... As things stand now, a little less than 6% in the first half of 2019-20, and a little more than 6% in the second half of 2019-20, are not unlikely. In other words, 6% in 2019-20, not 7%,” he said in a write-up published in Economic Times.

Debroy further said that to achieve an objective of $5 trillion economy, the 8% required growth computed by the Economic Survey becomes elusive. In any event, required growth will be higher than 8%, he said.

The Centre has set a timeline of the financial year 2024-25 for India's economy to reach $5 trillion.

The PMEAC chief, however, suggested four economic reforms at the level of union government for the transition to 8% economic growth in the country. These are the removal of exemptions for both, personal income tax and corporate tax, removal of surcharges on income tax and corporate social responsibility, bringing down GST rate slab to three, the highest being 18% and pruning centrally sponsored schemes to maximum 15 for an efficient public expenditure.

Though, he said, these reforms too would have time lags of at least a year before they manifest as higher growth.

Debroy also suggested that privatisation of ‘central’ public sector enterprises (PSEs) should start with an inventory of land, both because the valuation of the land is contentious and because such PSE land often belongs to state governments, with leases for a specific purpose.