The states should maintain policy continuity even if political regime changes if the government has to achieve a $5 trillion economy goal, a report said.
The states should maintain policy continuity even if political regime changes if the Modi government has to achieve a $5 trillion economy goal, a report said. In addition, rather than going for short term measures like farm loan waivers, the states with agriculture as mainstay should work towards improving their agricultural productivity, the SBI said in its latest report. It comes as the economy sees a slowdown, with Q2 GDP growing at a dismal rate of 4.5 per cent, raising concerns on how the Modi government would realize its dream of making India a $5 trillion economy by 2024. While Andhra Pradesh, Karnataka, Tamil Nadu, Telangana, Maharashtra, Rajasthan, Gujarat, Madhya Pradesh, West Bengal, and Uttar Pradesh may contribute more towards the goal, certain others particularly the North Eastern States lag behind in almost all the criteria, the SBI Ecowrap report also said.
“These States require special attention of the Government so that their contribution to national output also increases. However, the Government should ensure that land and labour reforms are expedited and the international best practices are adopted in case of both land and labour laws so that the states can grow to their full potential,” the report added.
Adding on farm loan waivers, SBI said that “even some analysts argue that, “If haircuts for corporate loans are possible, why not farm-loan waivers”. We believe, the write-off of corporate bad loans lead to economic growth whereas farm loan waivers lead to moral hazard”. Meanwhile, the economy is seeing a slowdown for some time now, on account of both domestic and global actors. The government has also announced a slew of measures in the past few months to prop up the sluggish economy.