New Delhi: T he government on Wednesday signalled that the Union budget for 2018-19 would include solutions for vexed problems such as rural distress, weak employment and revival of private investments.
These immediate challenges to the economy topped the extensive discussion that Prime Minister Narendra Modi and senior cabinet colleagues had on Wednesday with economists and sector experts from across the country.
Rajiv Kumar, vice-chairman of federal policy think tank NITI Aayog, which organized the discussion, said at a briefing that many experts suggested measures for raising farm productivity, reducing cost of farming and improving market access for farmers.
Experts also suggested that fresh capital infusion into public sector banks should be followed by reforms so that there are fewer instances of lending decisions going wrong. Last week, the government had informed Parliament of its decision to issue Rs80,000 crore worth of recapitalization bonds to raise resources for the capital infusion plan. The idea is to spend a total of Rs2.11 trillion to strengthen banks so that they are able to finance projects.
“The suggestions from experts included those for the forthcoming budget as well as for longer term structural reforms,” said Kumar.
Kumar added that NITI Aayog will soon come out with a new way of monitoring employment, based on various high-frequency data. He said the findings of a task force set up by NITI Aayog to examine employment data were “startling” and that they suggested a “better picture on the jobs front than what people thought”. He also said it was pointed out that educated unemployment among young people in the country may be as high as 20%.
A stronger exports-driven strategy was also discussed at the meeting. “There is a big opportunity here for India. And we need better government capability to target the sectors which are needed to expand exports,” he said.
The idea of broad-based consultation was to set a new economic policy for the future as growth is estimated to pick up further momentum after the shake-up from structural reforms.
The outcome of Wednesday’s discussions on key themes, including macroeconomic balances, agriculture and rural development, urban development, infrastructure and connectivity, employment, manufacturing, exports, health and education, could echo in the Union budget for 2018-19, the last full budget of the National Democratic Alliance regime before the 2019 elections.
Finance minister Arun Jaitley, transport minister Nitin Gadkari, agriculture minister Radha Mohan Singh and secretaries of various departments, also attended the meeting, said Kumar.
According to the latest forecast from the Central Statistics Office, the economy expanded at 6% in the six months ended 30 September and will complete FY18 with a 6.5% growth, implying a 7% expansion in the second half ending 31 March.
According to consulting firm EY, there are clear signs that growth numbers might progressively rise with the effects of demonetization and transition hiccups of goods and services tax behind us.