He remarked that due to the existing weakness in global demand, India's exports of goods have experienced a decline.
Sanjeev Sanyal, a member of the Economic Advisory Council to the Prime Minister, pointed out that taking any imprudent actions to boost domestic demand in an attempt to achieve higher economic growth at this juncture could have negative consequences. Therefore, he suggested that the country should focus on enhancing the supply side instead.
Addressing the audience at the Bharat Chamber of Commerce, Sanjeev Sanyal emphasized the significance of compounding in driving growth, a force that can yield remarkable results. He advocated for a measured approach to the present economic situation. He highlighted the importance of enhancing infrastructure, expanding capabilities, and fortifying the economy against external shocks through improved regulations.
Sanyal noted the current global demand weakness, resulting in a decline in India's merchandise exports. Given this condition of subdued export demands, he cautioned against hastily promoting domestic demands via stimulus measures. Such actions could strain the external sector and potentially lead to issues in the current account deficit (CAD).
"Currently, the country enjoys macroeconomic stability. The current account deficit (CAD) remains within a reasonable range," he remarked. He went on to mention that within the upcoming 18-24 months, India is projected to overtake Germany, securing its position as the fourth largest economy globally.
Significantly, the monetary policy committee (MPC) of the Reserve Bank of India is widely anticipated to uphold its key interest rates during its upcoming meeting on Thursday.
According to Sanyal, the government's upcoming reform agenda will target the administrative and judicial sectors. He highlighted that a new wave of reforms has been initiated since 2014. While the past decade saw reforms geared towards fostering an innovation-driven economy, including the introduction of the Insolvency and Bankruptcy Code (IBC) and GST implementation along with inflation targeting, Sanyal pointed out that the focus has now shifted to two major reforms: administrative and judicial. He emphasized that achieving broad public support is essential for the success of these reforms.
