Prime Minister Narendra Modi highlighted the fiscal and reform measures undertaken by the government following the Covid-19 outbreak as he held deliberations with top economists who pitched for pushing privatisation, avoiding challenging international arbitrations and increasing infrastructure spending. Participating in a virtual meeting with the Prime Minister, some economists suggested that the government could take a lenient view on fiscal deficit in the forthcoming Budget for 2021-22 due to the urgency to revive the pandemic-hit economy, sources said.
According to a note issued by Niti Aayog after the meeting, all the attendants agreed that high frequency indicators are showing signs of a strong economic recovery, and that too earlier than expected. "The attendants were broadly in agreement that next year will see robust growth and suggested measures to maintain this growth rate to drive India's socio-economic transformation," it said.
In his concluding remarks after the two-hour long meeting, the Prime Minister highlighted that together with a fiscal stimulus, the government also tried reform-based stimulus, which was seen in historic reforms in agriculture, commercial coal mining and labour laws. Modi further said the Covid-19 pandemic and the subsequent management threw up new professional challenges for all those involved.
"The prime minister explained his vision behind an Atmanirbhar Bharat, where Indian companies are integrated in global supply chains in a manner not seen before," it said. On infrastructure, Modi highlighted the National Infrastructure Pipeline as the government's commitment to developing world class infrastructure. "The prime minister ended his talk by stating the importance of partnerships in achieving our goals, and that such consultations play a crucial role in setting the broader economic agenda," the note said.
According to the sources, the participants urged the government to come up with policies to increase exports and build investors' confidence as despite multiple structural reforms across sectors, investments are still not flowing into India in a big way. "There is a need to boost investor confidence. Government should avoid challenging everything (international arbitration awards). This is important as investors are still wary of investing in India despite several reform measures," one of the sources present in the meeting said.
The speakers also stressed on the need to raise India's tax-to-GDP ratio, which is declining since 2008, embark on import tariff rationalisation and undertake bank recapitalisation. Some participants also pitched for creating a separate ministry for privatisation of PSUs and assets, if needed, as was the case earlier.
