Though the Economic Survey 2016-17 talks about bad bank approach to put the non-performing assets (NPAs) of banks into order, but at this moment, the key challenge for India is to drive greater levels of consumption and demand, NITI Aayog, chief executive officer (CEO), Amitabh Kant said at an ASSOCHAM event in New Delhi.
“Infrastructure creation and rural demand both should be able to create a consumer demand which will enable demand to grow as that is the basic challenge before the economy today,” said Kant while addressing ASSOCHAM’s 96th Annual Session.
“Consumer demand must drive production and as production grows there should be greater demand for liquidity and in that process you should be able to centralise your NPAs and put your banks in a better order, which is what the Economic Survey talks about,” he added.
He also emphasised upon bringing greater consistency, predictability and clarity of policies. “A lot of India’s growth gets impacted because we lack predictability and consistency in policies and therefore I think government’s full determination to drive GST (goods and services tax) and bring in a policy measure which will enable India to have consistency and predictability over a long term will hold the key.”
He said that getting GST implemented will be one of the biggest challenges which the government is determined to do it this year.
“This year will truly be the year of GST and it will enable consistency because it will not be possible for one government alone but two-third majority alone will be able to change the GST law and therefore there will greater predictability and consistency,” said Kant.
The NITI Aayog, CEO also said that India needs to enhance its total factor productivity as we do a lot of inefficient management across public sectors.” To manage the public resources better, one of the key attempts of the government is to ensure that public sectors are divested and we manage them in an efficient manner.”
He said that one of the government’s key strategies is to move towards a far better and a far more efficient management. “As we move forward, states need to bring in greater levels of reforms, on both land and water.”
Kant further said that process of urbanisation in India will continue and that will be very critical, besides it is important that India uses technology to leapfrog in this area. “Innovation has to be the hallmark of India’s growth.”
He also said that India needs to put huge amount of resources in creating infrastructure but government alone cannot create world-class infrastructure as such there is need for a good private-public-partnership (PPP).
“The PPP in infrastructure which is broken down needs to be re-stored, we need to restructure our projects in a much better way, we need to ensure that all approvals are in place before projects are put out for bidding, we need to create SPVs (special purpose vehicles) where all approvals are already in place when they are bid out, so an SPV should house all the approvals and then bid out,” said Kant.
He said that India has become very complicated and a difficult place to do business in last 68-69 years. “We need to make India very simple, very easy for all of you to generate business and create wealth and do well, therefore there is a need to scrap to a lot of rules, regulation procedures, acts.
“We have scrapped to about 1,100 laws, there is a huge focus on ease of doing business, we have created a sense of competition among states in terms of ranking, naming-shaming the states,” said Kant.
He said that it will be very difficult for India to grow over a long period of time if education and health standards are not improved. “Therefore, learning outcomes and health outcomes is something NITI Aayog is laying focus on and this year you will see us do that on both these fronts – health and education.”
He also said that India is facing the challenge to grow at 9-10 per cent over a long period of three decades or more to be able to lift a very young population above poverty line.
As such it is very important for India to create wealth. “We need to create an ecosystem where wealth creation gets appreciated. The government has to act as a facilitator, as a catalyst in creating the right ecosystems,” said Kant.