As India is reeling under an economic slowdown, Krishnamurthy Subramanian, CEA, emphasized on the need for private companies to come forward and give a boost to the economy by making investments.
As India is reeling under an economic slowdown, Krishnamurthy Subramanian, Chief Economic Advisor of the government emphasized on the need for private companies to come forward and give a boost to the economy by making investments. Reaffirming that while India’s economic fundamentals remain strong, it is investments which is hampering growth and is resulting in a slowdown. “The key driver is investment. It is investment that enhances productivity. Productivity then enhances purchasing power and creates better paying jobs and demand,” Krishnamurthy Subramanian said at the 9th edition of FICCI Massmerize event on Wednesday. “Around 2008-2009, our investment rates were touching 40% of the GDP. That has declined now due to the banking sector, the NPAs… the investment rates have slowed down significantly,” he added.
As the ongoing economic slowdown has taken a toll over sales numbers of many FMCG companies along with other industries such as automobile and ancillary sectors, it has become pertinent that the liquidity condition of the country is improved. “We need to increase the investment rates significantly for the economic cycle to start operating much faster,” Krishnamurthy Subramanian said. However, the consumer sentiment for consumption is a short term variable but the investment needs to be from a long term perspective. “I have to actually urge the corporates to make investments as others will also be nudged to follow their example. Corporates here will have a dual role to play, of not just recognising the right time to make investment but also of showing the way for other companies,” Krishnamurthy Subramanian added.
Meanwhile, Rajat Wahi, Parter, Deloitte, told Financial Express Online that the ongoing slowdown is the first in 20 years and Deloitte remains bullish that India can become a $10 trillion economy by 2032. “In the last 20 years, we have had one slowdown, I don’t think we should base anything on that,” he said.