New Delhi: The Confederation of Indian Industry (CII) has expressed a hope that the Indian economy is expected to rebound in 2020. The CII President said that this would become possible because of the corrective measures taken by the central government and the Reserve bank of India. The CII President said that the negative trend in the economy, as seen in the first two quarters will continue even in the next quarter.
There are signs of mild improvement in the Indian economy with an increase in demand for vehicles. It seems that the number of air passengers also has increased. Considering these trends, the CII has expressed hope that the Indian economy will surge ahead in 2020. The CII President said that the Union government’s decision to relax the norms for the fiscal deficit also would have a positive effect on the Indian economy.
In the last two months, the performance of the Indian economy was at alarming levels. Economists had claimed that the GDP rate reaching 4.5% is a warning bell for the economy. The International Monetary Fund also had warned that if immediate measures are not taken, the economy will head towards a major crisis. The recently published RBI report noted that measures were necessary to revive demand and investments.
Against this background, the CII expects the Indian economy to surge ahead in the year 2020. But former chief economic advisor, Arvind Subramaniam gave some frank advice to the government. Subramaniam said that instead of making dramatic announcements, it would be necessary to focus on constructive matters in the budget. It is claimed that the government was contemplating income tax concessions in this budget. But only 5% of the country’s population has been paying income tax. Subramaniam said that therefore, the economy would not majorly benefit by giving concessions in the income tax.
Subramaniam has suggested that the government should instead provide an impetus to the Prime Minister Kisan Yojana or employment Guarantee Scheme, by making more provisions for these schemes. As a result, more money will be available in people’s hands and the demand will rise.’
Reduced demand is the biggest challenge faced by the Indian economy. The reduced demand has delivered a blow to the manufacturing sector with the decline in industrial production. Reports of retrenchment were consistently received, even from renowned companies. The vehicle industry was the worst affected by this.
The economy slowed down further as the demand from the rural sector also declined to alarming levels. The global economy was in crisis because of the US-China trade war and exports from all the countries recorded significant declines. This has put major stress even on the Indian economy. However, now the United States and China have announced an end to the trade war, and it is expected to have a very positive effect on the Indian economy, is the confidence expressed.
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