Pawan Goenka said the growth will be back to 8 per cent but it will be a slow climb as “everybody realises and understands what needs to be done."
While whatever structural reforms required to boost the growth of economy have already been talked about in the budget, the government now has to focus on wealth creation that will help the economy grow, according to Mahindra & Mahindra managing director Pawan Goenka. “I don’t think in the next few months, you will hear of any structural reforms,” Goenka told The Sunday Express on the sidelines of IIT Kanpur Alumni conference. “Wealth creation will lead to economic growth. And, that’s what the government perhaps needs to focus on,” he added as he talked about ensuring companies creating wealth are encouraged to do so. “And the feeling that we generally have about wealth creation … that mindset needs to change.”
For the initiatives announced in the budget by the Finance Minister Nirmala Sitharaman, one would have to “wait to see how those give a positive rub off to economic growth,” he said as the GDP has been “very low, lowest in many, many quarters,” Goenka added with respect to the near future recovery of the economy. Moody’s Investors Service had last week in its Global Macro Outlook report slashed the country’s GDP growth forecast to 5.4 per cent and 5.8 per cent for 2020 and 2021 respectively from 6.6 per cent and 6.7 per cent. “While the economy may well begin to recover in the current quarter, we expect any recovery to be slower than we had previously expected,” the report had said.
However, Goenka said the growth will be back to 8 per cent but it will be a slow climb as “everybody realises and understands what needs to be done. And there’s clearly renewed thrust on economic growth that we have seen,” he said. The finance minister Nirmala Sitharaman had announced cut in personal income tax and given relief to companies on payment of dividend in her second budget speech earlier this month for the financial year FY21 as the government looked at boosting consumption to help pull the economy out of the worst slowdown in 11 years.
“We have to realise that the fiscal room available to the government is not very high. It really becomes very difficult to give economic stimulus. Though experts would say stimulus will bring the economy back in gear, but at the same time, if they’re not willing to spend … you know, what is the effect that might come in?” said Goenka as he talked about the required focus by the government.