GDP growth has not picked up as expected, says Arvind Subramanian
27 May 2015
Apart from extensive structural reforms and a visible reduction in corruption, as evident from a clean and transparent auction of coal and spectrum, the NDA government's chief economic advisor Arvind Subramanian is not happy with the economy's performance in the first year of the government.
"In one year, more could have been done but I think GDP growth has not picked up as expected," government's economic advisor Arvind Subramanian said even as he reeled out facts and figures on the performance of the NDA government during its first year.
"Going forward, people will judge us on economic growth, which will be the focus of our next course of action," Subramanian told reporters in the national capital, adding that people judge the rulers by outcome and not by effort.
Addressing the press on Tuesday, he also made out a strong case for a simple goods and services tax (GST) and a reduction in the interest rate, given the visible improvement in the macroeconomic outlook.
"As the macro-economic situation has seen a massive turnaround, more can be done in the next 18 months, while 'Make in India' will be a long-term strategy to make the country's economy competitive," he said.
While the structural reforms would take time to influence growth, Subramanian said, policy support was crucial over the short term, especially for consumption and public and private investments.
Also, at a time when private investment continued to be weak, he said, the government's proposal to allow manufacturing states to levy a 1 per cent additional tax on supply of goods could undermine the 'Make in India' programme by encouraging imports rather than the inter-state movement of goods that the GST had been envisaged to facilitate.
Alternatively, he said, interest rate cuts in China and elsewhere would make Indian exports and manufacturing uncompetitive.
Also, declining exports was a cause for concern, as merchandise trade was yet to recover, he noted.
"We also need to find ways of relieving the distress in rural incomes. MNREGA, crop insurance, minimum support price will help improve farmers' income," Subramanian noted.
He also felt the controversy over the minimum alternative tax (MAT) had hurt the government's image, but the government has learn't from its mistake.
However, Subramanian said, much has been done. The number of stuck projects are coming down but the projects are yet to pick-up.
"I think structural reforms agenda has been substantial. Reduction in corruption is visible, as evident from a clean and transparent auction of coal and spectrum; liberalisation of gold import regime, and reducing rents intrinsic to quantitative restrictions," he said.
Achievements during the year gone by included cooperative and competitive federalism by adopting the 14th Finance Commission's recommendations and creating Niti Aayog in place of Planning Commission, he said.
"The government is close to securing political agreement to launch the game-changing Goods and Services Taxes (GST) regime from next fiscal," he said.