State of the economy: Narendra Modi govt’s reform intent is positive but execution is key, says economist Gaurav Kapur

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Structural reforms such as GST (goods and services tax) executed by the Narendra Modi government will help India grow in the years ahead, but immediate concerns such as low private investment and rising unemployment need to be addressed with a sense of urgency, said Gaurav Kapur, chief economist at IndusInd Bank.

Gaurav Kapur, Chief Economist, IndusInd Bank. Firstpost image.

Gaurav Kapur, Chief Economist, IndusInd Bank. Firstpost image.

Kapur was speaking at the Firstpost State of the Economy Dialogues, the fourth in a series of discussions on Indian economy. “Private investment activity has been slowing down all the way back from 2014-15. Clearly, reviving investments is one big challenge, even after interest rates have come down,” said Kapur, adding that the government needs to give special emphasis on skill development to generate jobs to the young workforce.

According to Kapur, the banking sector recapitalisation plan announced by the central government as part of the Rs 9 lakh crore economic stimulus plan, is expected to give a big boost to the banking sector, although there are doubts over the ability of smaller public sector banks to raise money from the market.

Of the Rs 2.11 lakh crore, Rs 1.35 lakh crore is scheduled to come from the recapitalisation bonds. The government is yet to decide the nature of these bonds. Of the remaining Rs 76,000 crore, Rs 58,000 crore is set to come from the market, while the balance is part of the ongoing capital infusion plan under the ‘Indradhanush’ programme.

But, if done carefully this recapitalisation exercise can help the banking sector revive the investment demand in the country provided there is a simultaneous pick-up in the economic activities on the ground, Kapur said. He said the reform momentum of the government is positive for the economy but added that execution is key for the success of any reforms.

Source firstpost.com
Via firstpost.com

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