A day after Moody’s downgraded India’s credit rating to a notch above junk status on growth concerns, Prime Minister Narendra Modi on Tuesday asserted that the country will definitely get back its economic growth and said reforms undertaken during the lockdown will help the economy in the long-run.
Pledging to undertake more structural reforms that will change the course of the country, he chartered out his vision for an Atma-nirbhar Bharat or Self-reliant India – one that is not dependent on any other country in strategic sectors and one that embraces the world on its own strength.Speaking at CII’s Annual Session, he called on India Inc to rise to the occasion and partner rural India in these testing times.
“On the one hand we have taken tough steps to fight the virus and on the other, we have taken care of the economy,” he said adding “we have to save the lives of citizens while also stabilise the economy and speed up growth.” As the government winds down the world’s most expansive lockdown, Indian industry has started talking about ‘getting growth back’.
“I will go beyond getting growth back to say Yes! We will definitely get our growth back,” he said expressing confidence in Indian farmers, small businesses, and entrepreneurs for helping achieve that.
His comments came a day after Moody’s Investors Service on Monday downgraded India to the lowest investment grade level and kept it on a negative watch, largely because the country faces a prolonged period of slower growth relative to its potential and rising debt levels.
It joined S&P Global Ratings and Fitch Ratings in predicting the first contraction in GDP in over four decades and a fiscal deficit blowout as the coronavirus pandemic spreads.
India was already in the midst of a protracted economic slowdown before the virus hit due to a festering crisis among shadow lenders and on declining consumer demand and private investment. It’s GDP grew by 4.2 per cent in 2019-20, the slowest pace in 11 years.Prime Minister Modi said India will tide over the coronavirus pandemic and will get back on track with the government’s decisive policies.
“We will definitely get our growth back. India will get its growth back,” he said.After more than two months of the world’s most expansive lockdown, the country has entered ‘Unlock Phase 1’. A large part of the economy has been opened up and more will open after June 8.Modi said the government will stand shoulder to shoulder with industries in their endeavour to help India get ahead on the path of self-reliance.
“The world is looking for a trusted, reliable partner and India has the potential, strength and ability. Today, all of you, including all industries must benefit from the trust that has developed for India all over the world,” he said. “If you take two steps, the government will be four steps ahead in supporting you. As the Prime Minister, I assure you that I will stand with you.” Addressing the meeting through a video conference, he laid out his vision for Atma-nirbhar Bharat – one that is less reliant on imports and makes products for the world.
“It is about creating a strong enterprise in India. Enterprises that can become global forces. It is about generating employment, empowering people to create solutions. It is about building robust and local supply chains which can strengthen global supply chains. We should Make In India for the world,” he added.
Calling for reducing non-essential imports to the minimum, Modi said the industry should set targets for each sector to increase productivity.”Priority sectors such as furniture, air conditioners, footwear, leather have been identified. We import more than 30 per cent of our air-conditioners. Despite being a major leather producer, our global share in exports is minimal. We are trying to reduce imports of mobile phones and defence items,” he said.
India has to now invest in the creation of a robust local supply chain that strengthens India’s stake in the global supply chain.
Prime Minister said India moving towards a growth-oriented future. “Reforms for us is not a random or scattered decision. It is a systematic, planned, integrated, interconnected futuristic process. Reform for us is daring to take decisions and take them to logical conclusions.” During the lockdown, the government opened up non-strategic sectors to the private sector. It freed up the coal sector by allowing commercial mining and allowed the private sector to invest in sectors like space and atomic energy. Also, long-pending labour reforms are being undertaken.
To get back on the growth path, the country needs to focus on 5 Is – intent, inclusion, investment, infrastructure and innovation, he said adding the recent bold decisions are a reflection of these.
“Getting growth back is not that difficult and the path to that is Atma-nirbhar bharat,” he said and added that “there is a need to create products that are Made in India and Made for the World.” Stating that strengthening the economy was among the highest priorities of the government, he said the decisions taken since March will help the nation in the long-run.
On government measures to deal with the fallout of lockdown, he said Rs 53,000 crore financial assistance in the form of free ration to poor and migrant workers, and cash to poor women and aged people have been provided. Over 8 crore poor households have been provided free cooking gas.
Also, steps have been taken to bring relief to farmers via an amendment to the Agricultural Produce Market Committee (APMC) Act. Farmers will now get the right to sell their produce on their own terms, he said.