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Editorial

ET EDIT-The Big If Only the Government Can Meet

September 19, 2019 06:10 AM

COURTESY ET EDIT SEPT 19

The Big If Only the Government Can Meet
The world is growing increasingly incapable of offering any succour to India’s growth woes. India has to seek internal solutions. The International Monetary Fund expects growth in 2019 to be 3.2%. The World Bank is more bearish at 2.6%. Since the forecasts were published, two chaotic months have ensued. America’s trade war against China has expanded in scale: today, almost every traded item attracts higher tariffs than before. This has dented almost every link in the world’s supply chains. With elections one year away, President Donald Trump stands bereft of any global breakthrough. Attempts to woo North Korea to the real world have failed; the US will stay stuck in Afghanistan; his initial belligerence on Iran failed, and recent attempts to make up with Tehran have been doomed by the destruction of half of Saudi Arabia’s oil facilities, allegedly by Yemenis with links to Iran.

Yet, as the world slows and global tensions rise, India can buck the trend if it plays its policy hand well. Boost domestic investment, to lift consumption. Reform and simplify the current GST regime and bring the exempt sectors of energy and real estate into its ambit. Get pools of patient capital to buy out stalled investment projects, right-size their costs, complete them and bring them to the market. Act on the Budget promise to greenlight public-private partnership projects in the infrastructure. Tell politicians like Jagan Reddy, who are reneging on their predecessors’ commitments, that political rivalry cannot be allowed to wreck India’s investment credibility.


And India must seize a great opportunity in global bond markets and their negative yields. If the government can ensure that investment will lead to returns and the returns will be passed on to investors, funding will cease to be a problem

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