The country’s GDP growth has been moderating on account of both global and domestic factors and the prospects over immediate term don’t seem too bright.
India’s economic growth rate, which was at about 8 per cent until a few years back, has been revised downwards. GDP growth rate for the first quarter of the current financial year is estimated at 6 per cent, while for the full year 2019-20, it is projected at 6.9 per cent in the August economic outlook survey by FICCI. The country’s GDP growth has been moderating on account of both global and domestic factors and the prospects over immediate term don’t seem too bright. Where industry and services are expected to grow at 6.9 percent and 8 per cent respectively, optimism in the growth of agriculture and allied activities is still moderate. The agriculture sector is expected to grow by a mere 2.2 per cent in 2019-20.
At 3.7 per cent, the retail inflation is expected to prevail below the RBI benchmark, whereas the industrial production is expected to grow by 4.5 per cent in the current financial year. Provided the global environment of slowdown, economists believe that it is extremely challenging for the Indian economy to reach the 8 per cent GDP growth mark and to sustain at that level in the next three to four years, according to the survey.
Economists suggest that boosting the agriculture sector, strengthening MSMEs, undertaking factor market reforms and enhancing avenues for infrastructure financing are the key areas that can improve the economic scenario if immediate attention is given. The survey mentioned that the availability of adequate and high-quality jobs persists to be one of the biggest challenges in the economy as there is a continued over-dependence on farm sector for employment.
To create more jobs, particularly in manufacturing and services sector, economists have suggested that the cost of doing business, adequate regulatory reforms, labour reforms and sector-specific special packages can contribute. It was also pointed out that from a regulatory standpoint, the government bond market, the corporate bond market and the equity market is treated separately in India and the same needs to be corrected.