Economic Uncertainty & Attracting Private Investment In Industry A Challenge: Economic Survey 2019-20
According to the Economic Survey, Index of Industrial Production (IIP) registered 3.6 per cent growth in 2018-19 as compared to 4.4 per cent rate in 2017-18.
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Economic Policy Uncertainty has been underlined by the Economic Survey 2018-19 as one of the key factors impinging on investment potential of the economy as it increases the systemic risk and thereby the cost of capital. An Index must be created to track Economic Policy Uncertainty and monitored at the highest level on a quarterly basis. This in turn will increase transparency on economic policy in the country, as per survey presented in Parliament by Finance Minister Nirmala Sitharaman on 04th July, 2019. Furthermore, the survey maintained that the Indian industry and infrastructure sector's real challenge is to bring in adequate private investment in collaboration with the public sector, said the Economic Survey 2018-19.
"The real challenge lies in bringing adequate private investment across the country with the collaboration of public sector. Along with physical infrastructure; provision of social infrastructure is also equally important as these two would determine where India will be placed in the world by 2030," stated the FM while presenting the survey in Rajya Sabha, adding, “"There is a need for establishing an institutional mechanism to deal with time-bound resolution of disputes in the infrastructure sector."
According to the Economic Survey, Index of Industrial Production (IIP) registered 3.6 per cent growth in 2018-19 as compared to 4.4 per cent rate in 2017-18. Public Private Partnerships are quintessential for addressing infrastructure gaps in the country, it added. In order to achieve the combined potential of "Industry 4.0 and Next Generation Infrastructure", it is necessary to get rid of the obstructions the sectors are facing, as claimed by the Survey. The overall index of eight core industries registered a growth of 4.3 per cent in 2018-19, similar to the increase achieved in 2017-18.
Commenting on the Economic Survey released today, Chandrajit Banerjee, Director General, CII, said, “The 7% growth pegged by the Economic Survey for 2019-20 is a pragmatic target and with the right policy levers in place, we can step-up growth to sustain an average growth rate of 8% over the next five years. Concerted effort is required to drive an improvement in private investment along with robust consumption to lift growth in the current fiscal from a multi-year low of 6.8% posted in 2018-19. However, the headwinds to growth as underlined by the Survey in the form of weaker exports growth and stress in shadow banking system are the main areas of concern which have been highlighted by CII as well’, said Mr Banerjee.
"As an emerging economy, the scope for 'Industry 4.0 and Next Generation Infrastructure' is enormous. To experience the potential of the perfect blend of these two, it is necessary to clear the decks which are obstructing the way forward," it said. It attributed the moderation in IIP growth to the subdued manufacturing activities in Q3 and Q4 of 2018-19.
“Further, we are in affirmation with the Survey’s key prognosis that for sustaining growth at 8%, investment would need to be the “key driver” for heralding simultaneous growth in demand, jobs, exports & productivity. CII has recommended a host of measures for spurring investment demand in the economy which carry the potential of aiding in India’s march towards the US$5 trillion economy by 2025,” added Banerjee from CII.