The paper discusses the need to focus attention on the primacy of growth as a policy objective. As the achievement of annual economic growth of about 7% has almost become commonplace, the country is now in danger of suffering from a degree of complacency. If India is to eliminate poverty and achieve upper middle income status in the foreseeable future, by around 2035, it must elevate its growth trajectory to the next level. This paper analyses the key macroeconomic tasks ahead to take growth back to 8-9%: sustained increase in savings and investment, fiscal consolidation through enhanced tax revenues, and a step up in infrastructure investment.
It also highlights the need to revive animal spirits in the private sector to rekindle investment, particularly in an internationally competitive manufacturing sector. This would need the maintenance of a realistic competitive exchange rate, along with implementation of long overdue bold land and labour reforms, incentivising labour using manufactured exports, and a focus on industrial research and development.
Efficient growth promoting private sector functioning requires the next generation of reforms to concentrate on the institutional and technical strengthening necessary to empower government at all levels, which enables it to ensure delivery of essential public goods and services, particularly in health and education.
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