The shape of economic recovery is indeed a ‘v-shaped’ one, says Shri Amitabh Kant at PHD Chamber Webinar
No. PR- 056
July 16, 2021
The shape of economic recovery is indeed a ‘v-shaped’ one, says Shri Amitabh Kant at PHD Chamber Webinar
Shri Amitabh Kant, Chief Executive Officer, Niti Aayog, mentioned that there were definite signs of revival and acceleration seen in the Indian economy at the outset of the 2nd wave of the pandemic. Manufacturing PMI remained in the expansionary zone, GST collections were robust and exports were growing at a healthy pace. He mentioned that the projections for GDP growth for the current financial year are implying a real growth rate between 9.5% – 12.5%, as per various agencies. This in turn implies that the shape of recovery taking place is indeed a ‘v-shaped’ one.
He was of the belief that despite the impact of the pandemic, India’s macroeconomic fundamentals remain strong. Going ahead, with active cases continuing to fall, and the pace of vaccinations gathering steam, manufacturing activity would bounce-back and inflationary pressures may continue to ease in the coming months. He said that raising investment levels will be crucial to India’s growth story going ahead, as they raise productivity and efficiency. Innovation, rising competitiveness and generating employment are the key instruments of growth that are unlocked through higher investments, especially through the private sector. He acknowledged that the Government recognises its role as an enabler in allowing the private sector, which is the engine of growth and employment in the economy, to thrive and drive India’s socio-economic transformation. He suggested that action is now needed at all levels of Government to rationalise and streamline forms and clearances to enhance improving the ease of doing business in the country.
PHD Chamber of Commerce and Industry organized a virtual programme on 3rd Economic Conclave: "Ease of doing Business and Uplifting Economic Growth” today.
Shri Deepak Bagla, Managing Director and CEO, Invest India, said that every tomorrow in India is going to be better than today- the only question is that how fast that would be! Demography is young in India and the young generation is wiling to adopt and adapt to technology at a faster momentum. In the pre-covid time, India had an opportunity and was one of the fastest moving economy in world. The past 4-5 months have impacted the livelihood and the core of life, however, the soundness and the stability of fundamentals of India is helping it to sail through pandemic times. India has attracted FDI of US$ 81.4 billion in March 2021 as compared to US$ 74 billion in March 2020, mainly because of trust, opportunity and such amicable environment provided by the country. India went in position of top 5 FDI destination from top 10. He mentioned that India had attracted FDI from 89 countries in 63 sectors and across 29 States of India. Entire FDI pockets are getting widened in India as States are taking effective initiative for ease of doing business. He was of the belief that the New India is going to emerge from small towns and cities compelled by MSMEs growth, as the MSMEs have managed through the constraints and have adapted through pandemic. He mentioned that the single window clearance for ease of doing business is ready in India and 12-15 States have already adopted the same. He opined that maneuvering through pandemic is both a mindset game and technology game.
Shri Sanjay Aggarwal, President, PHD Chamber, in his presidential remarks said that meaningful and proactive reforms undertaken by the Government in last many quarters has pulled the economy from the extreme lows. The recent data released by Government, such as IIP, core infra, exports, among others, are all in high growth trajectory, though majorly because of low base effect. He opined that the declining new Coronavirus cases, gradual unlocking in various parts of the country and announcement of calibrated economic reforms by the Government have created scope for economy to recover from the daunting impact witnessed in April and May 2021. At this juncture, there is a need for further calibrated measures to fuel the drivers of household consumption and private investments to enhance the aggregate demand in the economy as it will have an accelerated effect on expansion of capital investments in the country. He suggested that the Government should frontload the National Infra Pipeline expenditure as private investments are not coming in shorter period. The next 3 months should be devoted to enhance capacity and quality of country’s health infrastructure, at a war footing and the target should be set to vaccinate at least half of the population in next 2-3 months, i.e. by September 2021.
Shri Sanjay Chadha, Additional Secretary, Ministry of Commerce and Industry, said that India’s Ease of doing business has improved as well as technology advancement and innovations have also increased. The Government has taken various policy initiatives for industries to enable it to function and perform well. He mentioned that the PLI scheme is one of many WTO-compliant schemes aimed at making industries more competitive in a global arena. He mentioned that the Chinese market was a popular choice for investors because of low production cost, but the coronavirus outbreak shook investors’ confidence due to an uncertain supply chain. At this juncture, India may take advantage of this opportunity to attract investors to invest in the country. Along with this, there is a need to capitalize on PLI scheme and other production incentives and provide efficient access to market to the investors to make India a global manufacturing hub. He mentioned that the Government can make policies and play a role of facilitator, but it’s the Chambers, who can identify the specific areas of need of the industry and provide suggestions to the Government.
Dr Pronab Sen, Renowned Economist, Programme Director, International Growth Centre & Former Chairman, National Statistical Commission, said that the potential growth of a country depends upon level of investments, which is in-turn driven by the investment confidence. He informed that prior to the pandemic, the investment rate was 30%, however has decreased thereafter. Investment rate has not really recovered as of now and therefore, extreme focus is required to boost the investment rate. He opined that not only pandemic COVID, but the credibility also has affected the investment rate. He said that there will be ups and downs in the investment rate depending upon the business performances, but ultimately its rests on the credibility of investable funds. He said that the volume of investments is not translating into the global GDP. He also informed that the factories mostly focused on more and more capital intensive production rather than huge involvement of labor. He suggested that there is a need to upscale the skill level and improve the post literacy skills. He concluded his remarks by mentioning that statistical system has always been important for the economy and the same should be totally kept apart from the political agendas.
Prof. (Dr) NR Bhanumurthy, Renowned Economist and Vice Chancellor, BASE University, Bengaluru, said that ease of doing business has come a long way in India and the country may be near to rank in top 50 in upcoming year. This year, India is completing 3 decades of economic reforms. It is important that Government further increases its focus on land reforms and labour market flexibility. The Indian economy is likely to exhibit the potential GDP growth of 6-6.5% in FY 2022. The correlation between ease of doing business and actual GDP growth and GDP growth potential needs an assessment. He suggested that there is a need to improve business sentiments through decreased cost of production, decreased transaction cost and improved governance. He mentioned that the concept of USD 5 trillion economy needs to be revisited and revised. Over the 3 decades the biggest reform that has taken place on trade side is bringing down import tariff. He opined that the key ingredient for good public policy intervention is robust statistical system. All the policy reforms and major announcements by the Government relating to IBC, GST, disinvestments, among others are work in progress. So, it is only 5 years down the line, India would be in a position of double digit growth.
Shri Alok B. Shriram, Former President, PHD Chamber, appreciated the big steps taken by the Government to improve the ease of Business. He suggested that India need to focus on improving the lifestyle and quality of life by improving various problems related to education, skill, poverty and population. He stated that the single largest problem in India is unemployment. He suggested that for reducing poverty in India, businessman should have the primary target to create the Job. He said that in the past years the Government has announced various policies and initiative, however, there is a need to ensure their actual implementation at the ground level. He further stated that MSMEs have faced various problems related to the compliances, which needs Government attention. He suggested that interdependence is the order of the day.
Dr Mahesh Gupta, Former President, PHD Chamber of Commerce and Industry, talked about the devastating impact of the pandemic on the businesses and said that it is the biggest tragedy happened to the businesses in the last 100 years. He said that due to this pandemic, people’s mindset have changed and people spend more on health care facilities. He suggested that health care infrastructure need to be strengthened in the country. He highlighted the need for infrastructure creation and strengthening the same for future.
Shri Rajeev Talwar, Former President, PHD Chamber, opined that there is a need to uplift economic growth in such a way that it is inclusive and creating job opportunities. He suggested that change in mindset of political, business institutions and bureaucracies is the need of the hour. The aspirations of large Indian demography needs to be fulfilled to move from US$ 5 trillion economy to US$ 10-20 trillion economy. He mentioned that India has major gap in upskilling workers who are not skilled in modern way. Digitization, Artificial intelligence, robotics will be cutting edge technologies of future. He recommended that any 200- 300 bedded hospital should be allowed to set up a medical institution; the engineering colleges should be allowed to setup by the business houses. He said that people are willing to invest in India and at this juncture, the ideas of investments should be at the heart of Trade Associations and business ventures. There is a need to evolve methods and ensure implementation of ease of doing business, with respect to the convenience of businesses for next generation to have per capita income for US$ 10,000.
Shri Anil Chopra, Chair, Economic Affairs Committee, PHDCCI, in his theme presentation said that Government has undertaken appreciable reforms during the pandemic to provide relief to hardships of the industry and stimulate the economy, however, economy and industry need much more support from the Government. He suggested that there is a need to invest in both physical capital as well as in human capital. He recommended that there is need of innovative thinking, increasing digitisation, imparting of skill sets and new age efficiency to take India to greater heights. He opined that boosting liquidity is need of the moment and focus is required on effective implementation, monitoring and ensuring real time effect of reforms already announced by the Government in this regard. He mentioned that India has improved in terms of ease of doing business over the years, however, working on the low scoring factors for the country would prove to be transformational in making India one of the best destinations to do business.
PHDCCI’s session was supported by DLF India; Multani Pharmaceuticals; UFLEX; JK Tyre & Industries; Marble City; Paramount Cables; SMC Investments and Advisors; Blossom Kochhar Aroma Magic; Comtech Interio; DCM Shriram Industries; Radico Khaitan; R.E. Rogers India; Ajit Industries; Synergy Environics; Timberworkz; Jindal Stainless; P S Bedi & Co; and IFFCO.
PHD Chamber of Commerce and Industry