{"id":34941,"date":"2018-10-31T14:31:49","date_gmt":"2018-10-31T09:01:49","guid":{"rendered":"https:\/\/blog.forumias.com\/?p=34941"},"modified":"2018-10-31T14:31:49","modified_gmt":"2018-10-31T09:01:49","slug":"intervention-rethinking-needed-to-stir-demand","status":"publish","type":"post","link":"https:\/\/forumias.com\/blog\/intervention-rethinking-needed-to-stir-demand\/","title":{"rendered":"\u2018Intervention, rethinking needed to stir demand\u2019:"},"content":{"rendered":"<p><a href=\"http:\/\/www.thehindu.com\/todays-paper\/tp-business\/intervention-rethinking-needed-to-stir-demand\/article19754652.ece\"><span style=\"font-weight: 400;\">\u2018Intervention, rethinking needed to stir demand\u2019<\/span><\/a><span style=\"font-weight: 400;\">: <\/span><\/p>\n<p><b>Context<\/b><\/p>\n<ul>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">The current economic scenario of slow growth and decreasing exports suggests measures to be taken by the government to push investments and demand in the economy.<\/span><\/li>\n<\/ul>\n<p><b>What is the Current economic scenario?<\/b><\/p>\n<ul>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">Subdued growth<\/span><\/li>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">Slowdown in exports<\/span><\/li>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">Slowdown in job creation<\/span><\/li>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">Slow Global recovery<\/span><\/li>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">All this call for government intervention<\/span><\/li>\n<\/ul>\n<p><b>What are the suggested measures?<\/b><\/p>\n<ul>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">Increased capital spending<\/span> <span style=\"font-weight: 400;\">by centre as well as states on infrastructure.<\/span><\/li>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">Fiscal consolidation target may be relaxed for a year.<\/span><\/li>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">This has a multiplier effect on economic growth as higher spending on projects creates jobs which further create greater demand for goods and services in the economy.<\/span><\/li>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">Implementation bottlenecks need to be addressed.<\/span><\/li>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">Government could issue special bonds for large infrastructure spends.<\/span><\/li>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">The recent PPP option announced for low cost housing is innovative as it targets issues in risk allocation.<\/span><\/li>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">Similar models can be offered to other infrastructure sectors.<\/span><\/li>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">Clauses on renegotiation and grievance redressa<\/span><b>l<\/b><span style=\"font-weight: 400;\"> need to be included in such policies.<\/span><\/li>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">The government should recapitalise banks<\/span> <span style=\"font-weight: 400;\">by raising capital without putting pressure on the balance sheet by trimming its large holdings in these banks.<\/span><\/li>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">The government has also been concerned about a slowdown in job creation.<\/span><\/li>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">While growth revival through public spending will itself create jobs especially in the construction sector, it is also necessary to focus on the labour-intensive sectors.<\/span><\/li>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">It is time to recast labour laws and allow fixed term employment contracts ensuring more flexibility.<\/span><\/li>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">The government\u2019s recent initiative on setting<\/span> <span style=\"font-weight: 400;\">minimum wages is a move in the opposite direction and should be reconsidered.<\/span><\/li>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">The government needs to resolve issues related to GST especially for the small and medium sector.<\/span><\/li>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">Problems faced by exporters such as withdrawal of duty drawback benefit need to be addressed immediately.<\/span><\/li>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">There is a need to catalyse<\/span> <span style=\"font-weight: 400;\">FDI in organized food retail which can create a supply chain transformation and strengthen the linkages between farmers and markets.<\/span><\/li>\n<\/ul>\n<p><b>How can RBI\u2019s supporting role help?<\/b><\/p>\n<ul>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">It needs to place some priority on growth while deciding on monetary policy.<\/span><\/li>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">The monetary policy committee seems to be ignoring the weak growth trends while setting interest rates.<\/span><\/li>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">The policy repo rate of 6% does seem excessively high for an economy that is facing recessionary pressure.<\/span><\/li>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">The RBI could outline a plan of cutting interest rates over a period of time.<\/span><\/li>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">The exporters should have access to easily available credit.<\/span><\/li>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">This can be done by expanding interest rate subvention from the current rate to 4% and allowing commercial banks to lend more to SME exporters or tweaking working capital norms.<\/span><\/li>\n<\/ul>\n","protected":false},"excerpt":{"rendered":"<p>\u2018Intervention, rethinking needed to stir demand\u2019: Context The current economic scenario of slow growth and decreasing exports suggests measures to be taken by the government to push investments and demand in the economy. What is the Current economic scenario? Subdued growth Slowdown in exports Slowdown in job creation Slow Global recovery All this call for&hellip; <a class=\"more-link\" href=\"https:\/\/forumias.com\/blog\/intervention-rethinking-needed-to-stir-demand\/\">Continue reading <span class=\"screen-reader-text\">\u2018Intervention, rethinking needed to stir demand\u2019:<\/span><\/a><\/p>\n","protected":false},"author":61,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"jetpack_post_was_ever_published":false,"footnotes":""},"categories":[555],"tags":[],"class_list":["post-34941","post","type-post","status-publish","format-standard","hentry","category-test-1","entry"],"jetpack_featured_media_url":"","views":{"total":0,"cached_at":"","cached_date":1704952525},"jetpack_sharing_enabled":true,"_links":{"self":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/posts\/34941","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/users\/61"}],"replies":[{"embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/comments?post=34941"}],"version-history":[{"count":0,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/posts\/34941\/revisions"}],"wp:attachment":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/media?parent=34941"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/categories?post=34941"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/tags?post=34941"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}