Niti Aayog has made a strong case for boosting savings and investments with a view to push the country’s economy into a higher growth trajectory. In its appraisal of the Twelfth Five Year Plan (2012-17), the Aayog has stressed on maintaining macro-economic stability. “Low levels of savings and investment rates are still a cause of concern. Thus, intense and dedicated efforts in terms of appropriate policy interventions in a time-bound manner are required to boost savings and investment in the economy,” the document said. Niti Aayog Vice Chairman Arvind Panagariya in his foreword said in a significant departure from the past, this appraisal does not take a chapter-by-chapter approach. “Instead, it selects nine major thematic areas encompassing the economy and elaborates upon them.
The emphasis is on gleaning lessons and chartering the way forward,” Panagariya noted. The document also pointed out that the policy interventions must be focused on the key drivers of growth: boosting investment, skill formation and creating the appropriate environment. Stating that a stable and predictable tax regime is a precondition for sustained high levels of Investment, it said “therefore, prime importance should be given to boosting investor’s sentiments positively so as to reap the benefits of high foreign investment of a long-term and stable nature.” Referring to Goods and Services Tax (GST), the document said it (GST) will help in increased compliance, boost tax revenues, reduce the tax outflow in the hands of the consumers and make exports competitive.
“It is expected that the implementation of GST will push up GDP by 1-2 per cent,” the document said. Noting that ahe absence of long-term financing instruments is a major impediment in developing infrastructure projects in India, leading to stalling of projects and lack of enough developers, the document said, “So, it is imperative to implement measures aimed at removing structural constraints and reviving stalled and stuck projects so that production and investment activity gather momentum.”
Acknowledging that Inflation management is another crucial area to accelerate growth, the document said a greater focus should be placed on management of price levels. “There should be effective coordination of monetary and fiscal policy if overall economic performance is to be optimized and maintained in the long term,” the document said.