New Delhi, Dec 17 (IANS) Faced with the task of boosting private investment for reviving the sagging economy, the Centre has initiated consultation with captains of Indian industry ahead of the Union Budget.
Industry expects the government to take short-term measures to boost investor and consumer sentiments. Top corporate leaders including Ratan Tata, R.C. Bhargava, Azim Premji and Kumar Mangalam Birla are set to provide key inputs to restart the stuttering growth engine.
Sources said that Tata Sons Chairman emeritus Ratan Tata and Tata Sons Chairman N. Chandrasekaran have met Commerce & Industry Minister Piyush Goyal here. Reportedly, the meeting was a part of the government’s outreach efforts to seek inputs from the industry to craft short-to-medium term policy measures to revive consumption.
According to sources, another aim of these consultation meetings is to understand the challenges such as regulations and liquidity conditions faced by the corporates in expanding operations.
Consequently, the boost in private investment is expected to lead to employment generation and demand augmentation, thereby reversing the cycle of degrowth.
The government expects the private sector to play a major role in employment generation as it exits from various PSUs and hands over the management control to strategic investors.
The development assumes significance as the economy is facing stagflation, an economic trend marked by rising inflation and falling Gross Domestic Product.
Especially distressing is the fact that a subdued consumption trend, along with a massive contraction in manufacturing, agriculture and mining activities, has pulled India’s GDP growth rate down to 4.5 per cent in the second quarter of 2019-20.
This is the slowest GDP growth rate in around six years. The growth on a year-on-year basis during Q2 2018-19 had stood at 7 per cent.
Economy watchers have blamed subdued demand, high taxation, low job creation, stagnant wages and stressed rural sector for creating the economic slowdown.
Sectors such as automobile, consumer durables and capital goods have come under heavy pressure due to the slowdown.
Incidentally, the move comes as the Reserve Bank of India has taken a surprise “temporary pause” in reducing key lending rates to keep retail inflation in check.