Why reforms matter

23 DEC,2019 | MEDC


 

 

India’s latest macroeconomic data does not inspire much confidence. The Index of Industrial Production (IIP) contracted in October, for the third month in a succession. To an extent, it may be due to the festive season, as holidays mean lower industrial activity. But is also suggests that manufacturing may not recover anytime soon. The effectiveness of fiscal and monetary tools is getting increasingly blunted, and the underlying policy uncertainty is higher than normal. Policymakers need to think out of the box at this stage if they genuinely want to revive economic growth. A possible way out is for the government to resort to real disinvestment – as opposed to cross holdings between public sector firms – to signal its seriousness about reform. Sincere measures also need to be undertaken to enhance the ease of doing business in India. Such steps will help in boosting global investor confidence in the domestic economy.

 

*Photo Credit: Google

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