Helped by the solid micro and macroeconomic foundation laid over of the past five years of the Narendra Modi-led government,the Indian economy is ready to shift gears into fast lane for which investment, especially private, will be the key.
“…The Indian economy is ready to shift gears so that economic growth, jobs and exports can be pushed up to the next level," said the Economic Survey 2018-19 tabled in the Parliament on Thursday, while presenting a blueprint for growth for the next five years.
The Economic Survey was prepared by the Chief Economic Adviser (CEA) Krishnamurthy Subramanian.
One of the biggest challenges for the government is to revive economic growth that fell below 7% in 2018-19 and unemployment rate that hit a 45-year high of 6.5% in 2017-18.
Modi has time and again said that he aims to make India a $5 trillion economy in the next five years, making the country the third largest economy in the world, for which the country needs to grow at a rapid pace.
The survey, making an example of China and South East Asian nations, has said high growth rates have only been sustained by a model driven by a virtuous cycle of savings, investment, and exports catalysed and supported by a favourable demographic phase.
It says private investment is the key driver for boosting demand, increasing labour productivity, creating jobs and capacity. Towards this, an aggressive export strategy should also be the focus.
“This Survey makes the case for investment as the ‘key driver’ that can create a self-sustaining virtuous cycle in India. This investment can be both government investments in infrastructure, as such investment crowds in private investment," it said.
As far as job creation is concerned, it can be fostered by encouraging investment.
“When examined in the full value chain, capital investment fosters job creation as capital goods production, research and development, and supply chains also generate jobs," the Survey said, adding that international evidence suggests that capital and labour are complementary when high investment rate drives growth.