Getting the economy to turn around -Ajay Shankar
-The Hindu Business Line
Lowering the exchange rate to boost exports, a grant-based stimulus for auto sector and reviving stalled power projects will help
The slowdown in the Indian economy is far steeper than what most observers had expected. The government has announced a set of measures for revival. It has also indicated that more are in the pipeline. For this to have become necessary within weeks of the presentation of the Budget is not normal.
The measures announced, including the immediate provision of ?70,000 crore to public sector banks, should inject enough liquidity into the system to make credit readily available through banks and NBFCs and at lower interest rates. This was essential and overdue.
Ready availability of credit at reasonable real interest rates is a prerequisite for a turnaround. While this is a necessary condition for restoring the growth momentum in the economy, it is not a sufficient condition.
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