{"id":76895,"date":"2021-01-15T10:53:48","date_gmt":"2021-01-15T05:23:48","guid":{"rendered":"https:\/\/blog.forumias.com\/?p=76895"},"modified":"2021-01-15T20:26:08","modified_gmt":"2021-01-15T14:56:08","slug":"reviving-consumption-demand-for-economic-growth","status":"publish","type":"post","link":"https:\/\/forumias.com\/blog\/reviving-consumption-demand-for-economic-growth\/","title":{"rendered":"Reviving consumption demand\u00a0for economic growth\u00a0"},"content":{"rendered":"<p><b><span data-contrast=\"auto\">Synopsis-<\/span><\/b><b><span data-contrast=\"auto\">\u00a0<\/span><\/b><span data-contrast=\"auto\">Expenditure side of National Income is showing signs of stress. The government<\/span><span data-contrast=\"auto\">\u00a0should try to\u00a0<\/span><span data-contrast=\"auto\">revive<\/span><span data-contrast=\"auto\"> the con<\/span><span data-contrast=\"auto\">s<\/span><span data-contrast=\"auto\">umption<\/span><span data-contrast=\"auto\">\u00a0<\/span><span data-contrast=\"auto\">side\u00a0<\/span><span data-contrast=\"auto\">to return to the\u00a0<\/span><span data-contrast=\"auto\">growth path<\/span><span data-contrast=\"auto\">.<\/span><span data-ccp-props=\"{&quot;201341983&quot;:0,&quot;335559739&quot;:200,&quot;335559740&quot;:276}\">\u00a0<\/span><\/p>\n<p><b><span data-contrast=\"auto\">Introduction<\/span><\/b><span data-ccp-props=\"{&quot;201341983&quot;:0,&quot;335559739&quot;:200,&quot;335559740&quot;:276}\">\u00a0<\/span><\/p>\n<ul>\n<li data-leveltext=\"\uf0b7\" data-font=\"Symbol\" data-listid=\"1\" aria-setsize=\"-1\" data-aria-posinset=\"1\" data-aria-level=\"1\"><span data-contrast=\"auto\">T<\/span><span data-contrast=\"auto\">he first advance estimates of GDP growth for FY21 is more optimistic than the projections provided by many institutions, global and domestic.\u202f<\/span><span data-ccp-props=\"{&quot;134233279&quot;:true,&quot;201341983&quot;:0,&quot;335559739&quot;:200,&quot;335559740&quot;:276}\">\u00a0<\/span><\/li>\n<li data-leveltext=\"\uf0b7\" data-font=\"Symbol\" data-listid=\"1\" aria-setsize=\"-1\" data-aria-posinset=\"2\" data-aria-level=\"1\"><span data-contrast=\"auto\">However, the figures still have a substantial chance of uncertainty as the<\/span><span data-contrast=\"auto\">\u00a0source of<\/span><span data-contrast=\"auto\">\u00a0data<\/span><span data-contrast=\"auto\">\u00a0is not reliable<\/span><span data-contrast=\"auto\">\u00a0<\/span><span data-contrast=\"auto\">[<\/span><span data-contrast=\"auto\">Very little up-to-date primary information is available for the estimation<\/span><span data-contrast=\"auto\">]<\/span><span data-contrast=\"auto\">.<\/span><span data-ccp-props=\"{&quot;134233279&quot;:true,&quot;201341983&quot;:0,&quot;335559739&quot;:200,&quot;335559740&quot;:276}\">\u00a0<\/span><\/li>\n<\/ul>\n<p><b><span data-contrast=\"auto\">What\u00a0<\/span><\/b><b><span data-contrast=\"auto\">are the areas of concern?\u00a0<\/span><\/b><span data-ccp-props=\"{&quot;201341983&quot;:0,&quot;335559739&quot;:200,&quot;335559740&quot;:276}\">\u00a0<\/span><\/p>\n<p><span data-contrast=\"auto\">On the expenditure side, except for government final consumption expenditure, alternative drivers of demand are down sharply<\/span><span data-contrast=\"auto\">. N<\/span><span data-contrast=\"auto\">on-<\/span><span data-contrast=\"auto\">P<\/span><span data-contrast=\"auto\">ublic\u00a0<\/span><span data-contrast=\"auto\">C<\/span><span data-contrast=\"auto\">onsumption\u00a0<\/span><span data-contrast=\"auto\">E<\/span><span data-contrast=\"auto\">xpenditure is predicted to contract 9.5 per cent\u00a0<\/span><span data-contrast=\"auto\">while capital formation has contracted by 14.5 per cent, with imports and exports also contracting.<\/span><span data-contrast=\"auto\">\u202f<\/span><span data-ccp-props=\"{&quot;201341983&quot;:0,&quot;335559739&quot;:200,&quot;335559740&quot;:276}\">\u00a0<\/span><\/p>\n<p><span data-contrast=\"auto\">The economic performance was dented by sharp de-growth in the following three sectors-<\/span><span data-ccp-props=\"{&quot;201341983&quot;:0,&quot;335559739&quot;:200,&quot;335559740&quot;:276}\">\u00a0<\/span><\/p>\n<ul>\n<li data-leveltext=\"\uf0b7\" data-font=\"Symbol\" data-listid=\"4\" aria-setsize=\"-1\" data-aria-posinset=\"1\" data-aria-level=\"1\"><span data-contrast=\"auto\"><b>A<\/b> sector-wise breakup of data for F<\/span><span data-contrast=\"auto\">Y21 shows the\u00a0<\/span><b><span data-contrast=\"auto\">sharpest fall in\u00a0<\/span><\/b><b><span data-contrast=\"auto\">trade<\/span><\/b><span data-contrast=\"auto\">, hotels, transport, communication, a<\/span><span data-contrast=\"auto\">nd broadcasting services at\u00a0<\/span><b><span data-contrast=\"auto\">&#8211;<\/span><\/b><b><span data-contrast=\"auto\">21.4 per cent<\/span><\/b><span data-contrast=\"auto\">\u00a0from 3.6 per cent growth last year.\u00a0<\/span><span data-ccp-props=\"{&quot;134233279&quot;:true,&quot;201341983&quot;:0,&quot;335559739&quot;:200,&quot;335559740&quot;:276}\">\u00a0<\/span>\n<ul>\n<li style=\"list-style-type: none;\">\n<ul>\n<li data-leveltext=\"\uf0b7\" data-font=\"Symbol\" data-listid=\"4\" aria-setsize=\"-1\" data-aria-posinset=\"2\" data-aria-level=\"1\"><span data-contrast=\"auto\">This is followed by\u00a0<\/span><b><span data-contrast=\"auto\">12.6 per cent contraction\u00a0<\/span><\/b><b><span data-contrast=\"auto\">within the<\/span><\/b><b><span data-contrast=\"auto\">\u00a0construction<\/span><\/b><span data-contrast=\"auto\">\u00a0sector as against a growth of 1.3 per cent last year.<\/span><span data-ccp-props=\"{&quot;134233279&quot;:true,&quot;201341983&quot;:0,&quot;335559739&quot;:200,&quot;335559740&quot;:276}\">\u00a0<\/span><\/li>\n<\/ul>\n<\/li>\n<\/ul>\n<\/li>\n<li data-leveltext=\"\uf0b7\" data-font=\"Symbol\" data-listid=\"4\" aria-setsize=\"-1\" data-aria-posinset=\"3\" data-aria-level=\"1\"><b><span data-contrast=\"auto\">Manufacturing is declining by 9.4\u00a0<\/span><\/b><span data-contrast=\"auto\">per cent in 2020-21 from 0.03 per cent growth last year<\/span><span data-contrast=\"auto\">.<\/span><span data-ccp-props=\"{&quot;134233279&quot;:true,&quot;201341983&quot;:0,&quot;335559739&quot;:200,&quot;335559740&quot;:276}\">\u00a0<\/span><\/li>\n<\/ul>\n<p><span data-contrast=\"auto\">The estimated losses in these three sectors account for 93.5 percent of the total loss for the whole year.<\/span><span data-contrast=\"auto\">\u00a0Hence, fiscal policy needs to focus on priming demand to return to the trend growth path.<\/span><span data-ccp-props=\"{&quot;201341983&quot;:0,&quot;335559739&quot;:200,&quot;335559740&quot;:276}\">\u00a0<\/span><\/p>\n<p><b><span data-contrast=\"auto\">What policy interventions are needed<\/span><\/b><b><span data-contrast=\"auto\"> to increase consumption?<\/span><\/b><span data-ccp-props=\"{&quot;201341983&quot;:0,&quot;335559739&quot;:200,&quot;335559740&quot;:276}\">\u00a0<\/span><\/p>\n<ul>\n<li data-leveltext=\"\uf0b7\" data-font=\"Symbol\" data-listid=\"5\" aria-setsize=\"-1\" data-aria-posinset=\"1\" data-aria-level=\"1\"><b><span data-contrast=\"auto\">First, Government should focus on enhancing credit flows to the small and marginal farmers<\/span><\/b>\n<ul>\n<li style=\"list-style-type: none;\">\n<ul>\n<li data-leveltext=\"\uf0b7\" data-font=\"Symbol\" data-listid=\"5\" aria-setsize=\"-1\" data-aria-posinset=\"1\" data-aria-level=\"1\">KCC (Kisan Credit Cards) constitute 60% of Major outstanding bank credit due to COVID and Agri stress.<\/li>\n<li data-leveltext=\"\uf0b7\" data-font=\"Symbol\" data-listid=\"5\" aria-setsize=\"-1\" data-aria-posinset=\"1\" data-aria-level=\"1\">To encourage consumption among farmers, interest payment by farmers should be sufficient for their KCC loan renewal.<\/li>\n<li data-leveltext=\"\uf0b7\" data-font=\"Symbol\" data-listid=\"5\" aria-setsize=\"-1\" data-aria-posinset=\"1\" data-aria-level=\"1\">It may result in a reduction of the NPA of the banks from KCC.<\/li>\n<\/ul>\n<\/li>\n<\/ul>\n<\/li>\n<li data-leveltext=\"\uf0b7\" data-font=\"Symbol\" data-listid=\"5\" aria-setsize=\"-1\" data-aria-posinset=\"2\" data-aria-level=\"1\"><b><span data-contrast=\"none\">Second, the government should try to mainstream the tenant farmers<\/span><\/b>\n<ul>\n<li style=\"list-style-type: none;\">\n<ul>\n<li data-leveltext=\"\uf0b7\" data-font=\"Symbol\" data-listid=\"5\" aria-setsize=\"-1\" data-aria-posinset=\"2\" data-aria-level=\"1\">There are almost 3-4 crore tenant farmers, not receiving PM-KISAN benefits.<\/li>\n<li data-leveltext=\"\uf0b7\" data-font=\"Symbol\" data-listid=\"5\" aria-setsize=\"-1\" data-aria-posinset=\"2\" data-aria-level=\"1\">The government should try to formalize the credit delivery to tenant farmers by issuing tenancy certificates on the line of Andhra Pradesh.<\/li>\n<li data-leveltext=\"\uf0b7\" data-font=\"Symbol\" data-listid=\"5\" aria-setsize=\"-1\" data-aria-posinset=\"2\" data-aria-level=\"1\">Another way is the formation of SHGs to enable formal lending.<\/li>\n<\/ul>\n<\/li>\n<\/ul>\n<\/li>\n<\/ul>\n<ul>\n<li data-leveltext=\"\uf0b7\" data-font=\"Symbol\" data-listid=\"5\" aria-setsize=\"-1\" data-aria-posinset=\"1\" data-aria-level=\"1\"><b><span data-contrast=\"auto\">Third,\u00a0<\/span><\/b><b><span data-contrast=\"auto\">waive tax on <\/span><\/b><b><span data-contrast=\"auto\">Senior citizen saving scheme<\/span><\/b><span data-contrast=\"auto\">&#8211;<\/span><span data-contrast=\"auto\">\u00a0<\/span><span data-contrast=\"auto\">T<\/span><span data-contrast=\"auto\">he government should make<\/span><span data-contrast=\"auto\">\u00a0SCSS<\/span><span data-contrast=\"auto\">\u00a0interest income\u00a0<\/span><span data-contrast=\"auto\">to be\u00a0<\/span><span data-contrast=\"auto\">tax-free<\/span><span data-contrast=\"auto\">.<\/span><span data-ccp-props=\"{&quot;134233279&quot;:true,&quot;201341983&quot;:0,&quot;335559739&quot;:200,&quot;335559740&quot;:276}\">\u00a0<\/span><\/li>\n<li data-leveltext=\"\uf0b7\" data-font=\"Symbol\" data-listid=\"5\" aria-setsize=\"-1\" data-aria-posinset=\"2\" data-aria-level=\"1\"><b><span data-contrast=\"auto\">Fo<\/span><\/b><b><span data-contrast=\"auto\">u<\/span><\/b><b><span data-contrast=\"auto\">rth,<\/span><\/b><b><span data-contrast=\"auto\">\u00a0Launch<\/span><\/b><b><span data-contrast=\"auto\">\u00a0Adopt-a-family scheme<\/span><\/b><span data-contrast=\"auto\">&#8211;\u00a0<\/span><span data-contrast=\"auto\">The s<\/span><span data-contrast=\"auto\">cheme is voluntary and taxpayers with income up to over\u00a0<\/span><span data-contrast=\"auto\">Rs<\/span><span data-contrast=\"auto\">\u00a010 lakh\u00a0<\/span><span data-contrast=\"auto\">could be<\/span><span data-contrast=\"auto\">\u00a0incentivized for supporting a\u00a0<\/span><span data-contrast=\"none\">BPL family for a year<\/span><span data-contrast=\"auto\">. The government<\/span><span data-contrast=\"auto\">\u00a0<\/span><span data-contrast=\"auto\">can incentivize taxpayers with around\u00a0<\/span><span data-contrast=\"auto\">Rs<\/span><span data-contrast=\"auto\">\u00a050,000 tax deduction apa<\/span><span data-contrast=\"auto\">rt from exemption offered under-<\/span><span data-contrast=\"auto\">80C<\/span><span data-contrast=\"auto\">.\u00a0<\/span><span data-ccp-props=\"{&quot;134233279&quot;:true,&quot;201341983&quot;:0,&quot;335559739&quot;:200,&quot;335559740&quot;:240}\">\u00a0<\/span><\/li>\n<li data-leveltext=\"\uf0b7\" data-font=\"Symbol\" data-listid=\"5\" aria-setsize=\"-1\" data-aria-posinset=\"3\" data-aria-level=\"1\"><b><span data-contrast=\"auto\">Fifth,\u00a0<\/span><\/b><b><span data-contrast=\"auto\">take<\/span><\/b><b><span data-contrast=\"auto\"> the following steps<\/span><\/b><span data-contrast=\"auto\">\u00a0to bring more FDI and increase Ease of Doing Business rankings;<\/span><span data-ccp-props=\"{&quot;134233279&quot;:true,&quot;201341983&quot;:0,&quot;335559739&quot;:200,&quot;335559740&quot;:240}\">\u00a0<\/span><\/li>\n<\/ul>\n<ul>\n<li style=\"list-style-type: none;\">\n<ul>\n<li style=\"list-style-type: none;\">\n<ul>\n<li data-leveltext=\"o\" data-font=\"Courier New\" data-listid=\"5\" aria-setsize=\"-1\" data-aria-posinset=\"1\" data-aria-level=\"2\"><span data-contrast=\"auto\">Withdraw all tax appeals.<\/span><span data-ccp-props=\"{&quot;134233279&quot;:true,&quot;201341983&quot;:0,&quot;335559739&quot;:200,&quot;335559740&quot;:240}\">\u00a0<\/span><\/li>\n<li data-leveltext=\"o\" data-font=\"Courier New\" data-listid=\"5\" aria-setsize=\"-1\" data-aria-posinset=\"2\" data-aria-level=\"2\"><span data-contrast=\"auto\">Accept all domestic arbitration decisions against government departments\/agencies<\/span><span data-ccp-props=\"{&quot;134233279&quot;:true,&quot;201341983&quot;:0,&quot;335559739&quot;:200,&quot;335559740&quot;:276}\">\u00a0<\/span><\/li>\n<li data-leveltext=\"o\" data-font=\"Courier New\" data-listid=\"5\" aria-setsize=\"-1\" data-aria-posinset=\"3\" data-aria-level=\"2\"><span data-contrast=\"auto\">Clear\u00a0<\/span><span data-contrast=\"auto\">above<\/span><span data-contrast=\"auto\">\u00a0outstanding dues within a stipulated time.<\/span><span data-ccp-props=\"{&quot;134233279&quot;:true,&quot;201341983&quot;:0,&quot;335559739&quot;:200,&quot;335559740&quot;:276}\">\u00a0<\/span><\/li>\n<\/ul>\n<\/li>\n<\/ul>\n<\/li>\n<li><strong>Sixth<\/strong>,\u00a0<b><span data-contrast=\"none\">the <\/span><\/b><b><span data-contrast=\"none\">Government\u00a0<\/span><\/b><b><span data-contrast=\"none\">should<\/span><\/b><b><span data-contrast=\"none\"> increase investment in the health and education<\/span><\/b><b><span data-contrast=\"none\"> sectors;<\/span><\/b>\n<ul>\n<li style=\"list-style-type: none;\">\n<ul>\n<li>The government can introduce a medical savings account.<\/li>\n<li>Interest earned by the depositor can be deducted by government to provide the person with Mediclaim policy.<\/li>\n<\/ul>\n<\/li>\n<\/ul>\n<\/li>\n<\/ul>\n<ul>\n<li data-leveltext=\"\uf0b7\" data-font=\"Symbol\" data-listid=\"5\" aria-setsize=\"-1\" data-aria-posinset=\"4\" data-aria-level=\"1\"><b><span data-contrast=\"auto\">Lastly,<\/span><\/b><span data-contrast=\"auto\">\u00a0t<\/span><span data-contrast=\"auto\">he government should bring down its stake in state-owned banks to less than 50 percent.<\/span><\/li>\n<\/ul>\n<p><b><span data-contrast=\"auto\">Way forward-<\/span><\/b><span data-ccp-props=\"{&quot;201341983&quot;:0,&quot;335559739&quot;:200,&quot;335559740&quot;:276}\">\u00a0<\/span><\/p>\n<p><span data-contrast=\"auto\">By fulfilling these criteria, India can improve its position on the Ease of Doing Business ranking.<\/span><\/p>\n<p>&nbsp;<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Synopsis-\u00a0Expenditure side of National Income is showing signs of stress. The government\u00a0should try to\u00a0revive the consumption\u00a0side\u00a0to return to the\u00a0growth path.\u00a0 Introduction\u00a0 The first advance estimates of GDP growth for FY21 is more optimistic than the projections provided by many institutions, global and domestic.\u202f\u00a0 However, the figures still have a substantial chance of uncertainty as the\u00a0source&hellip; <a class=\"more-link\" href=\"https:\/\/forumias.com\/blog\/reviving-consumption-demand-for-economic-growth\/\">Continue reading <span class=\"screen-reader-text\">Reviving consumption demand\u00a0for economic growth\u00a0<\/span><\/a><\/p>\n","protected":false},"author":61,"featured_media":76905,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"jetpack_post_was_ever_published":false,"footnotes":""},"categories":[1230],"tags":[1284,1530],"class_list":["post-76895","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-9-pm-daily-articles","tag-eco_2","tag-gdp_national_income_updates","entry"],"jetpack_featured_media_url":"https:\/\/i0.wp.com\/forumias.com\/blog\/wp-content\/uploads\/2021\/01\/Reviving-consumption-demand-for-economic-growth.jpg?fit=1280%2C720&ssl=1","views":{"total":0,"cached_at":1700789297,"cached_date":1704749329},"jetpack_sharing_enabled":true,"_links":{"self":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/posts\/76895","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=76895"}],"version-history":[{"count":0,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/posts\/76895\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/media\/76905"}],"wp:attachment":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/media?parent=76895"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/categories?post=76895"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/tags?post=76895"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}