Importance path How to increase economic recovery of India

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Synopsis: Government should adopt a fiscal stimulus Path for the economic recovery of India, to make our economy grow at 9% GDP in the coming years. 


  • The impact of the pandemic has pushed India to impose stringent lockdown measures to save millions of lives of Indian citizens but it’s after effect has caused massive economic disruption. 
  • This has resulted in fall of GDP by around 7.5 percent for this full year which has dented our aspiration to become a$5 trillion economy by 2024. 
  • Though nothing much can be done for what has happened, in the coming years India needs to get back to the trend line of growth (pre-COVID years) to sustain the aspiration of our young population.

How different sectors are performing currently? 

  • The sectors which have shown a positive sign of recovery are
      • Pharmaceuticals and chemicals, the FMCG sector, the two-wheeler sector, Construction equipment’s driven by rural demand from sales to individuals, Capital goods.
  • In contrast, Sectors that are still struggling for a full recovery are
      • Mainly, the travel and tourism sector, real estate and construction sector, and retail which are significantly high employment sectors.

So, what steps must the government take?  

Though the recovery underway is solid, but we need measures to sustain and deepen it. The government can do three things. 

  • First, the government should resort to fiscal stimulus by paying long-overdue government bills. Few examples are, 
      • Distribute the pending tax refunds, pay the bills of all companies (large and small), pay off the many arbitration award spending where the government has lost cases, and pay state governments their pending GST dues. 
  • Second, invest in public health infrastructure and centre should finance state government efforts to build an extensive public health network. 
      • While this will equip as to handle a possible second wave of the virus, on the other, it will spread confidence.  
      • Also, it is essential for the government to work in partnership with private sector hospitals.
  • Third, invest massively in infrastructures such as roads, ports, logistics. Areas, where investment can be channelised, are,
      • By Providing decent, accessible housing to improve the living conditions in slums across our cities by providing right public-private program.
      • By providing cheap connectivity into our cities.
      • Even, the 20 trillion infrastructure pipeline project that requires massive funding can be considered.

How the funds for the above will be sourced?  

  • To mobilize its resources that are needed to finance the above measures, the government can opt for a huge privatization programme (Disinvestment) 
      • Under this program, the government should intend to reduce its share-holding to 26 percent across public-sector banks, steel companies, oil companies, and every manufacturing company and hotel it currently owns. 
      • This announcement might trigger a big rally in the stock prices of PSUs, increasing return. 
  • To stem the protests due to big reforms,we are witnessing currently, the government should choose democratic methods for implementing them such as use of discussion papers for public comment, the debate in Parliament.   

We need to act swiftly to regain from stunted recovery. We must use our economic crisis as an opportunity to set some bigger things right that we have ignored for too long. 

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