World Economy

Slew of Reforms Brighten Prospects for India Economy

Slew of Reforms Brighten Prospects for India Economy Slew of Reforms Brighten Prospects for India Economy

Prospects for the Indian economy look “very bright” with the remarkable turnaround witnessed in recent months on the back of lower current account deficit and the slew of reforms unleashed by the new government, Chief Economic Advisor Arvind Subramanian said here Wednesday.

“In July last year India was on the verge of macro-economic crisis. However, 16 months on, the picture is very different. There has been a remarkable turnaround in the economy since the last few months”, PTI reported. “The biggest change is the new government in power that has unleashed a slew of reforms. Prospects for the Indian economy should be very bright going forward,” Subramanian said while speaking at a workshop.

Stating the current account deficit (CAD) is now within “manageable territory”, Subramaniam said: “India has benefitted a lot from the falling commodity prices which have helped bring down the current account deficit”.

In the global context, India is looking “very special”, he noted, adding that World Bank yesterday revised downwards the growth for “every major country except India”.

Pointing out that the cash balances of state-owned enterprises look “exciting”, Subramanian suggested they invest more, adding that the PSUs could make a “real contribution to kickstart the economic growth”.

  Zero Interference

Speaking on the occasion, Union Heavy Industries & Public Enterprises Minister Anant Geete said his ministry had a “zero interference” policy in the day-to-day functioning of public sector enterprises.

“The Boards of CPSEs have been provided with a large measure of flexibility and autonomy to deal with day to day management issues. We will give more autonomy, if needed, to the public sector enterprises,” the Minister said at the international workshop on ‘Performance Evaluation and Management of State Owned Enterprises’.

  WB Forecast

The World Bank yesterday said that India would catch up with China’s economic growth in the year 2016-17.

In its report, the multilateral lender also forecast a growth rate of seven percent each in the fiscal year 2016 and 2017 as against China’s 7 percent and 6.9 percent respectively.

The Washington-based development institution raised its forecasts for India, saying growth in Asia’s third-largest economy would accelerate in the coming years even as much of the world is slowing down. The reason? New Delhi is implementing changes that will make the country’s economy more efficient and vibrant.

Prime Minister Narendra Modi took office in May after his party won a rare majority in Parliament on a campaign promising smaller government and bigger growth. Since taking office, he has unveiled ambitious plans to change how India’s economy is managed.

“After several years of stalled progress, the newly-elected government has begun to implement measures to cut red tape, raise infrastructure investment, deregulate key parts of the economy, and shrink the role of government,” the World Bank said in its ‘Global Economic Prospects’ report released Tuesday.

“Implementation stepped up during the fourth quarter, with the opening up of the coal industry to private investors, a deregulation of diesel prices to reduce the fiscal subsidy bill, a relaxation of labor market laws, and a linking of cash transfers with efforts to increase financial inclusion”, were all cited by the report as helping in India’s progress towards supercharged growth.

While China has held the title as hardest-hitting heavyweight economy for years, it has been suffering through a slowdown and may have to give up the belt in 2017, according to World Bank projections in the report.