India plans a Rs10,000,000-cr infra push to spur economy
02 December 2019
The BJP government which saw its second term in office vitiated by a continuing decline in economic growth, has proposed to come up with a series of infrastructure projects this month as part of a Rs10,00,000-crore ($1.39 trillion) investment in infrastructure projects over the next five years.
Finance minister Nirmala Sitaraman announced the measures to pump-prime the economy after government data released on Friday showed the economy grew at a mere 4.5 per cent in the July-September quarter – the slowest pace in six years.
The weakening of economic growth and falling revenue collections have combined to up the pressure on Prime Minister Narendra Modi’s government to speed reforms.
“A set of officers are looking into the pipeline of projects that can be readied so that once the fund is ready, it could be front-loaded on these projects,” Sitharaman said at The Economic Times business summit in Mumbai.
“That task is nearly completed. Before December 15, we will be able to announce frontloading of at least ten projects,” she said.
Modi won a second term in May and has taken various measures since 2014 to spur growth, including cutting the corporate tax and speeding up privatisation of state-run firms.
But several economic indicators show domestic consumption is weak, and many economists expect the current slowdown could persist for another two years.
Addressing a press conference in New Delhi on Friday, Sitharaman spoke about the government’s reform agenda and the state of the economy. The finance minister said the tax scrutiny process would be simplified along with the GST system.
Members of the Prime Minister’s Economic Advisory Council have sounded warnings about the economy. Shamika Ravi, who is also the research director of the Brookings India think tank, on Friday, said the country was facing a structural slowdown. She added that many ministries need to follow “a national growth strategy with time-bound goals”.
Ravi’s statement came a day after NITI Aayog vice chairperson Rajiv Kumar said extraordinary steps were needed to deal with an unprecedented crisis in the financial sector. He said the government needed to encourage the private sector to invest, and eliminate apprehensions about policies in the minds of private players.