The Q1 figures for 2019-20 (April to June 2019) show a real GDP growth rate of 5.0%.       

Reacting to this, the Chairman of the Economic Advisory Council to the Prime Minister (EAC-PM), Bibek Debroy, said that a lot of unnecessary negativism was being generated about the economy. It is true that there are global uncertainties and net exports cannot, right now, be a major growth driver for India. Despite this, in 2019-20, real GDP growth is expected to be between 6.5 and 7.0%. This range isn’t one projected only by government institutions and those who work for the government. Those external to the government have also projected similar ranges of growth. When many countries in the world are struggling to find positive growth, 6.5 to 7% is not to be lightly dismissed.

To make a dent on poverty and increase job growth, real rates of growth need to be more. Bibek Debroy stressed that several reform measures introduced by the government are meant to address precisely this question, both the cyclical and structural aspects. When economists list out structural constraints, they often mention factor markets, which are in the State List or the Concurrent List. Alternatively, they concern the legislature or the judiciary. Therefore, because these reforms are complicated areas, reforms will happen incrementally, not overnight.

Just last week and today, the Union government has announced several measures to achieve higher growth. Bibek Debroy highlighted reforms in the financial sector and taxation procedures. Indirect tax reform will occur through GST Council and the Task Force on Direct Taxes has already submitted its recommendations. The government has announced its intention to privatize central public sector enterprises, adhere to fiscal consolidation and review central schemes on public expenditure. The macro fundamentals of the economy are sound and these measures will begin to show results in a couple of quarters.

Therefore, Bibek Debroy stressed that those who seek to spread a message of gloom and doom are doing a great disservice. The EAC-PM does not endorse such views. While constructive criticism and suggestions are welcome, a message of despair and hand-wringing is best avoided. Bibek Debroy expects real growth in 2019-20 to be around 6.5%, increasing to 7% in 2020-21, because growth in the second half of the year is likely to be more than the first.

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