India has potential for 8% growth in 2-3 years, says NITI Aayog

Prescribing policy measures to keep the economy on a strong footing, the NITI Aayog on Thursday said that India’s prospects of reaching the 8 per cent growth target in the next few years are very bright.

“Indeed, there are good prospects that we will return to 8 per cent plus growth trajectory in another two to three years if not sooner,” it said in the Three Year Action Agenda for 2017-18 to 2019-20.

The 211-page document, which replaces the erstwhile Five Year Plans that were prepared by the former Planning Commission, was released by Finance Minister Arun Jaitley.

The report comes soon after the second volume of the Economic Survey had given a downward risk to its earlier forecast of 6.75 to 7.5 per cent GDP growth for 2017-18.

The economy had grown by 7.1 per cent last fiscal and official data on the first quarter GDP growth in 2017-18 will be released on August 31.

While calling for fiscal consolidation to stay on course and for the fiscal deficit target of 3 per cent of the GDP by 2018-19 to be met, the document said reforms in taxation policy and administration will further reduce tax evasion and expand the tax base.

Giving a thumbs-up to the Goods and Services Tax, it said it will increase indirect tax buoyancy by at least 5 per cent annually, though it would be revenue-neutral in the first year.

Demonetisation would give a one-time boost to direct tax revenue this fiscal, it added.

While noting that Indians are “restless” and expect higher growth, Jaitley said the Action Agenda, if implemented, has the “capacity to trigger much more economic activity than we have today”.

To this end, the three-year roadmap also called for more reforms to benefit the 125 crore citizens through measures like higher expenditure in high-priority sectors like education and health and a strong programme for rural transformation to double farmers’ incomes by 2022.

NITI Aayog Vice-Chairman Arvind Panagariya, who demits office at the end of the month, expressed hope that his successor Rajiv Kumar would carry on the agenda.

Terming underemployment as a more serious problem than employment, it has called for creation of high-productivity and high-wage jobs.

For this, it also proposed specific measures to jump-start key manufacturing and services sectors like apparel, electronics, tourism and real estate.

Highlighting the high non-performing assets (NPAs) in the banking sector, the report said the government should strengthen the State Bank of India-led Asset Reconstruction Companies to actively participate in the auctions.

“To overcome the problems associated with consortium lending and the general reluctance on the part of the managers of public sector banks to sell NPAs at below face value, the government will need to play an active role in facilitating auctions,” it further said.

It has also suggested ways to facilitate urbanisation and deal with key challenges like affordable housing, infrastructure development, pubic transport and promotion of Swachh Bharat.