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When the chips are way down, things can only look up. Amidst pandemic-constrained economic activity, in its first advance estimate of national income for 2020-21, the Central Statistics Office (CSO) has pegged GDP growth contraction at 7.7%. Clearly, the way forward is a bold policy-push to proactively shore up the growth momentum.
The way ahead is to fast-forward large infrastructure projects, complete with a robust project governance structure, via a national-level project management agency to aid collaboration between Centre and the states, and for gainful public-private partnerships. Foreign capital can be drawn into infrastructure. Notice that at current prices, gross fixed capital formation (GFCF), or the investment rate, is down to 24.2% of GDP, which is over 10 percentage points lower than that in the high-growth years of 2003-08.
Also, while growth in agriculture is put at a credible 7.3%, at current prices, it does point to supply-constrained price rise. Further, the steep contraction in manufactures, construction and trade, transport, hospitality and allied segments surely calls for sustained fiscal support to purposefully broadbase recovery going forward. We do need to duly step up government expenditure and shore up public investment to boost demand. Targeted fiscal incentives are warranted to kick-start growth. With a well-planned vaccination drive, we can surely better manage the risks at hand.
Along with a massive investment programme, we need to objectively improve procurement processes for bigticket investments in the pipeline, and strengthen contracts management in the bargain. Further, we need to streamline mediation and conciliation systems for large projects, for instance, by designating special courts for prompt resolution of infrastructure disputes. Note that under the Specific Relief (Amendment) Act, 2018, there is a provision for mandating civil courts to settle project disputes, and all states do need to be involved for speedy resolution. Focused policy action would better coagulate funds on the ground. The built future is now.
Courtesy - The Economic Times.
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