Kick-starting the economy after elections

With the elections to the Indian Parliament nearly over, whichever party comes to power needs to seriously worry about how to kick-start the economy.

Published: 14th May 2019 04:00 AM  |   Last Updated: 14th May 2019 08:00 AM   |  A+A-

money, 100 rupee note, india economy, indian economy, money, cash, currency

Image used for representational purpose only (File photo | Reuters)

With the elections to the Indian Parliament nearly over, whichever party comes to power needs to seriously worry about how to kick-start the economy. In February, the Index of Industrial Production contracted for the first time in 21 months. To add to the slowdown woes, automobile sales fell to an eight-year-low in April. More worryingly the data put out by government agencies showed that capital equipment production shrank by a massive 8.7 per cent.

Capital goods production is seen as an indicator for future growth as unless industries invest in new machinery and factories, there are hardly any chances for acceleration in the years ahead. The chances of a demand impetus from abroad to rescue domestic growth also seem quite bleak as trade war rages between the US and China. An economic blockade imposed by America on Iran will also ensure crude prices will rise. 

The election itself has seen an injection of fresh funds into the economy that could help push demand. It has been estimated that politicians and the state spent Rs 20,000- Rs 50,000 crore across the country. However, the manner in which this money has been injected is not very well understood and one cannot say how exactly it would impact the economy.

FOLLOW OUR ELECTION COVERAGE HERE

The new government will have to devise better ways of boosting demand and creating jobs. It has to think beyond money injections while cutting the ever-increasing expenditure of governance.

A slew of bold reforms would have to be taken: disinvestment, expansion of infrastructure, agricultural reforms, rationalising subsidies and a massive, calibrated reform of India’s banking and shadow banking sectors.

Needless to say, the fiscal policies which the new government will need to bring in must be in tune with the overarching need to spur growth and jobs, not by increasing the tax burden on people and businesses, but by giving enough scope for growth to gather momentum.

This in itself would increase revenue generation both for the nation and for tax collectors.

Stay up to date on all the latest Editorials news with The New Indian Express App. Download now
(Get the news that matters from New Indian Express on WhatsApp. Click this link and hit 'Click to Subscribe'. Follow the instructions after that.)

Comments

Disclaimer : We respect your thoughts and views! But we need to be judicious while moderating your comments. All the comments will be moderated by the newindianexpress.com editorial. Abstain from posting comments that are obscene, defamatory or inflammatory, and do not indulge in personal attacks. Try to avoid outside hyperlinks inside the comment. Help us delete comments that do not follow these guidelines.

The views expressed in comments published on newindianexpress.com are those of the comment writers alone. They do not represent the views or opinions of newindianexpress.com or its staff, nor do they represent the views or opinions of The New Indian Express Group, or any entity of, or affiliated with, The New Indian Express Group. newindianexpress.com reserves the right to take any or all comments down at any time.

flipboard facebook twitter whatsapp