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Finance Minister of India Nirmala Sitharaman thinks that the economic reforms only can ensure India’s sustainable economic growth momentum. She was speaking at Kolkata recently at a special session on Sustainable Growth Momentum During Covid Times, organized by Merchant Chamber of Commerce and Industry (MCCI). She pointed out that the present NDA government has always upheld economic reforms to have sustainable growth. This is why even during the Covid situation government did not hesitate to take reform measures in different sectors like agriculture, labour, banking and industry.

Sitharaman mentioned that after she had taken the charge of finance ministry the economy faced two big problems. In 2019 economy faced crisis of availability of credit. Government worked hard to solve it but later Covid crisis came in 2020 and the economy was seriously impacted. She pointed out what measures had been taken to stimulate growth in the economy in the Covid situation. The economy began to grow well as he mentioned several indicators as testimony to her claim.

In welcome address Akash Shah President of MCCI pointed out several relief measures taken by the government. Many of them pointed out by the FM later in her address. Measures like direct fund transfer to the household, Pradhan Mantri Garib Kalyan Rojgaar Abhiyan, insurance coverage for workers, wage increase under MGNREGA. For MSME sector redefining MSME to bring more industry under its ambit, extension of relief measures in the form of credit guarantees, funds for MSME, credit facility for street vendors, etc. Thirdly, regulatory and compliance measures in the form of postponement of tax filing and other related compliances, higher FDI limits in defence and space sector, development of industrial land/Land Bank, etc. Fourthly, proactive push towards increased domestic production via PLI schemes, reforms in government procurement policies to promote procurement from domestic manufactures, etc.

In addition to these mentioned above the government has taken measures for industries a slew of liquidity measures along with the RBI. For MSME different financial measures and e-market linkages as replacement of trade fairs were also taken, according to Shah. As measures for NBFC `30 crore liquidity infusion, `45 crore partial credit guarantee scheme were also announced. There were also relief provisions for real estate and EPC contractors and manufacturers.

India’s economic growth in 2020-21

The Second Advance Estimate of the growth of GDP of Indian economy has been minus 8%. In the last FY 2019-20 it was 4%. The Ministry of Statistics and Programme Implementation, government of India said this on the last 26th February. In its First Advance Estimate on 29th January, the government had projected its contraction by 7.7%. The government data can be understood in a different way. According to the data released on 26th February the real GDP, which means, the GDP at constant prices (that is, considering price level of 2011-12 as the base) in the year 2020-21 is likely to attain a level of `134.09 lakh crore. This has been as against `145.66 lakh crore in the First Revised Estimate of GDP for 2019-20. In the Covid year the per capita income will also fall. In FY 2020-21it is estimated as `85,929 as compared to `94,566 in 2019-20.

The Indian economy came out of recession and expanded by 0.4% in the 3rd quarter. In the 1st quarter and second quarter the GDP was negative. A section of economists think that the 4th quarter growth rates may be negative (even on a low base) because in February and March many sectors the economy fared badly.

Second wave of Covid not to impact economy

Finance Minister also said in the discussion that the Indian economy would not be impacted by Covid second wave. Implementation of proper government policy would help the economy grow sustainably. But the question is that the economy has already started impacting as a result of second wave of Covid. Various institutions or organizations have already projected lower growth forecast of the Indian economy than they projected earlier. The Indian government is yet to take special action to counter the negative impact of Covid second wave. Even the supply of Covid vaccines has been less than what is required as of now. In her discussion Sitharaman repeatedly appealed to the industrial persons present in the meeting to have their trust on the government about proper policy implementation. “Mutual trust between industry and government is important for success of an economy” said Sitharaman.

Implementation of the reform measure is important for an economy to grow sustainably. But the social scientists think that in a democratic country like India important decisions should be taken democratically. That means participation of as many people as possible in the running of the government. Democratic process may be time taking but it is at the same time long lasting and fruitful. Perhaps the present government has been lagging in the democratic process in framing several important policies and their implementations. This is why India has not been successful in reaping the full benefits of its reform policies yet.