Demonetisation and hastily implemented GST (goods and services tax) are the key reasons behind the ongoing slowdown, former Prime Minister Manmohan Singh said.
The GST was introduced at a time when the economy was already recovering from the negative effects of the demonetisation and this hit the economy, the eminent economist said, adding it would take some years for the sluggish economy to revive.
The ongoing economic weakness is expected to be a result of lack of liquidity in the system, Manmohan Singh told Hindi daily Dainik Bhaskar in an interview. Adding, former finance minister said that the government needs to address both structural and cyclical problems so that the economy gets back to a high rate of growth in 3 to 4 years.
Suggesting ways to improve the situation, former prime minister said that the Modi government needs to rationalise the GST even if it results in a revenue loss in the near term.
In Pics: Which country will get richer this year?
(Slideshow by Lovemoney)
Boosting consumption in the rural sector and reviving the agriculture should be high on the agenda of the government, he added. There is a need to introduce measures to increase liquidity in the system, he noted. The key job generating sectors including automobile, textile and electronics should be boosted and easy loans should be handed over for the purpose especially to the small businesses.
On bank merger, he said that even as it may strengthen the banking sector but questions can be raised on the timing of the move. Meanwhile, different industry bodies have come up with a demand for stimulus from the government so as to boost low demand.
Finance Minister Nirmala Sitharaman has even announced a slew of measures over the past few weeks with an aim to improve the investor sentiment and push economic growth.
Also watch: India’s economic slowdown: Unseen factors
(Video provided by NDTV)