Economic Growth cannot be taken for Granted: Need for Urgent Reforms
Vol 25, No 4; Article by Charan Singh; December 2013
In Conversation with Dr. A Virmani, Former Executive Director, International Monetary Fund and Former Chief Economic Advisor, Government of India
The Indian economy has experienced a downturn in recent years. The overall global scenario has been one of the causal factors for this as exports were directly impacted and the current account deficit (CAD) widened. On the domestic front, declining investment and weak aggregate demand have been some of the key factors for this downward trend.
A combination of the slowing domestic economy along with uncertainties in the global economy affected important macro variables in India. By end of 2012 India saw itself in a grim situation with high twin deficits. The CAD to gross domestic product ratio touched an all-time record high of 6.7% in the last quarter of 2012.
To address the situation, policy makers urgently need to focus on some crucial matters which include reduction of CAD and containing fiscal deficit. Also, there is need to revive demand -- and that would need sustained reforms, to bring in an upturn in the investment climate and investor sentiments. Policy reforms in India -- regulatory as well as institutional would need to be considered on priority basis.
Dr A Virmani discusses the issues detailed above with Prof Charan Singh of the Indian Institute of Management Bangalore.