Reviving domestic demand

12 AUG,2019 | MEDC


 

Rural investment holds the key to the revival of the economy. The focus has to be on those at the bottom of the pyramid – the socioeconomically marginalized, who face high unemployment rates. Expenditure on infrastructure projects should be beefed up and more needs to be done on raising rural disposable incomes. The RBI has made the interest rate structure suitably attractive for business activity to pick up, and focus should now be on investments which are local and use local resources, particularly in rural areas. With improvement in the southwest monsoon in the recent past, the kharif crop sowing is expected to be normal this year. Strategic fiscal tweaks should be provided for rural development projects, given that the rainfall is highly skewed in the hinterland, and so, several states and crops are still grappling with deficient rains. Ultimately, it is the rural purchasing power which is responsible for a sustained revival of domestic demand, and so, policy should be framed accordingly.

*Photo Credit: Google

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