Prime Minister Narendra Modi on Tuesday voiced confidence in the economy’s ability to return to a path of rapid growth, listing it among his government’s top priorities and pledging its commitment to systematic reforms amid concerns that the coronavirus disease (Covid-19) pandemic could plunge India into a prolonged slowdown.
“Yes! We will definitely get our growth back,” Modi said in his speech to a conference on ‘Getting Growth Back’ organised by the Confederation of Indian Industry (CII) to mark the organisation’s 125th anniversary, as India emerges from the Covid-19 outbreak and subsequent 68-day lockdown.
“Some of you may think in this time of crisis how could I say this with such confidence? There are many reasons for this confidence. I’ve confidence in India’s capabilities and crisis management. I’ve confidence in India’s talent and technology; I’ve confidence in India’s innovation and intellect. I’ve confidence in India’s farmers, MSMEs [micro, small and medium enterprises] and entrepreneurs,” Modi said in Hindi through a video link.
Modi’s first major speech on the economy since the post-Covid-19 lockdown began on March 25 came a day after Moody’s Investors Service cut India’s rating by one notch to the lowest investment grade with a negative outlook, citing growing risks that Asia’s third largest economy will face a prolonged period of slower growth.
According to official data released on Friday, the economy grew 3.1% in the three months ended March 31, 2020, and 4.2% — the slowest pace in 11 years — in the financial year 2019-20. The prolonged nationwide lockdown in the aftermath of the Covid-19 pandemic is expected to dent growth further.
Moody’s said the lowering of India’s rating reflects its view that “the country’s policy making institutions will be challenged in enacting and implementing policies which effectively mitigate the risks of a sustained period of relatively low growth, significant further deterioration in the general government fiscal position and stress in the financial sector.”
Congress member of Parliament Rahul Gandhi took note of Moody’s action in a Twitter post.
“Moody’s has rated Modi’s handling of India’s economy a step above JUNK,” he wrote. “Lack of support to the poor and the MSME sector means the worst is yet to come.”
The upbeat note struck by Modi in his speech cheered the financial markets. The benchmark Sensex index of the Bombay Stock Exchange rose 522.01 points, or 1.57%, to 33,825.53 and the National Stock Exchange’s Nifty gained 152. 95 points, or 1.56%, to 9,979.10. The rupee gained 18 paise to 75.36 per dollar
Modi said one of the “highest priorities” of his government is to strengthen the economy.
“For this the government is taking decisions required to be taken immediately. And simultaneously, such decisions have also been taken that would help the country in the long run,” he said.
The Prime Minister was referring to the ~20.97 lakh crore citizens welfare and economic stimulus packages announced between March 26 and May 17 that included free foodgrains and direct cash benefits to the poor, credit guarantee schemes for the industry, monetary measures by the Reserve Bank of India (RBI) and wide-ranging policy reforms.
India has left behind the lockdown and has entered into “unlock phase one” and a major part of the economy has restarted, Modi said. “Today we are able to do this because when coronavirus was spreading globally, India took right steps at the right time. When we compare us with other countries, we come to know about the effectiveness of the lockdown in India,” he said.
“The Prime Minister Garib Kalyan Yojana (PMGKY) helped in giving immediate relief to the poor. Under this scheme, rations have been provided to 740 million beneficiaries. Free rations are also being supplied to the migrant labourers,” he said. He said the package helped the poor and 80 million of them got free cooking gas cylinders under the scheme. PMGKY was the first response to Covid-19 that was announced by finance minister Nirmala Sitharaman on March 26. Prime Minister Modi said the entire package was a combination of providing relief to the underprivileged and restoring the economy along with policy reforms. “For us, reform is not a random or scattered decision. For us, reform is systematic, planned, integrated, inter-connected and futuristic process. For us, reform means dare to take decisions and take them to the logical conclusion,” he said.
He said five things are necessary to take India on the higher growth trajectory — intent, inclusion, investment, infrastructure and innovation. “You can get a glimpse of them also in the bold decisions taken recently,” he said.
The government has given farmers the freedom to sell their produce without having to go through middlemen. Modi said labour laws were being reformed to create more job opportunities and the private sector participation has been allowed in strategic sectors such as space and nuclear energy.
Modi said the path of growth was self-reliance and the world had great expectations from India. “India has potential, strength and ability. All of you should, India’s industry should take full advantage of the trust the world has for India,” he said.
He added: “Getting growth back is not that difficult. And, above all you have, Indian industries have a clear path, which is the path of Atmanirbhar Bharat (self-reliant India).”
“It is about creating a strong enterprise in India. Enterprises that can become global forces. it about generating employment. It is about empowering our people to come out and create solutions that can define the future of our country,” he said.
Sunil Kant Munjal, a past president of the CII and one of the founders of the Hero Group, said industry will play probably the most crucial role in making India self-reliant. “The Atmanirbhar Bharat which PM Modi talked about… will rightly be driven by the five ‘I’s — intent, inclusion, investment, infrastructure and innovation,” Munjal said. “Another ‘I’ of internet would be important too, though one could say that infrastructure would cover that. For India to stay safe and maintain modest growth in these difficult times, it is important that both government and industry show their best intent to take bold decisions and make tough choices which will make us competitive, strong, agile and better prepared to face the future.” – Hindustan Times