JOIN USThe government seems to be under the impression that India is a consumption-led growth story. No country has grown financially by consuming more, Dr. Nagaraj Rayaprolu, professor, Indira Gandhi Institute of Development Research, Mumbai, said at St Aloysius College on Monday.
He was speaking on ‘The Economic Slowdown’ organised by the Department of Economics. Dr Rayaprolu said consumption increases with demand. But if there is no demand, it results in stagnation of growth, and that is what is happening in this case.
“Post demonetisation, the investment demands were not effectively stimulated by the government. There was no proper insulation against the economic shocks caused by demonetisation and poorly implemented GST. Many investments went back due to abrupt changes in the economic condition,” he added.
Issues such as stagnation of industrial growth rate, stalling of Foreign Direct Investments (FDI) and absence of conducive environment for investments have reflected in the savings and investment ratios. Right now, there is a huge corporate debt and lack of demand. The export demand has also declined. All these factors have led to the loss of jobs, he stressed.
He pointed out that the government’s economic data was under a cloud. While the government claims that the GDP rate is 7, the researchers counter it as being only 4.5. The government until two months ago was denying that there was an economic slowdown and was overestimating the growth rates, Dr Nagaraj Rayaprolu said. “I do not agree with the government which declares the economic slowdown as a short term phenomenon,” he said.
India is a country with huge surplus labour, he said and stressed that autonomous public expenditure can revive economic slowdown. “The government should provide jobs in rural areas to empower economically marginalised people. Countries like Japan had been making investments in productive areas. India should follow the same model. In the present condition, the government should not borrow much and even if it does borrow, the funds should not be used for trivial purposes. This may land the country in debts,” Dr Rayaprolu added.
St Aloysius College Principal Fr Pravin Martis presided over the programme. Economics Department Head Dr Norbert Lobo was present.