Chennai, February 3, 2017
To revive economy and create employment, the Centre’s focus should be on freeing up bad assets to increase corporate borrowing and skilling people in textile and leather industry, say experts.
Speaking at a panel discussion on the Union Budget 2017 organised by The Hindu Centre for Politics and Public Policy, Praveen Chakravarty, Senior Fellow, IDFC Institute, said to revive economy and spur growth, we need to free up bad assets that have been festering for the past three years. “There are Rs.15 lakh crore worth of bad assets in corporate and bank balance sheets. It largely impacts how loan decisions are made and corporate’s ability to borrow more. This should have got lot more attention this budget,” Chakravarty said.
The solution would be freeing up bad assets by public sale or auction. “This will help corporates borrow more and result in investments and lead to growth,” he said at the discussion moderated by Raghavan Srinivasan, Editor, BusinessLine.
In terms of allocation or policy education, healthcare and skilling did not get much attention. Chakravarty said. “We need to focus on textile and leather if we want to create more jobs in the country.”
CVS Krishnakumar, member of Taxation Committee, South Indian Chamber of Commerce and Industry, said, “Though not much happened in terms of skilling, industries like textiles and leather have been identified as potential sectors by the current government. But implementation is going to take time.”
R Srinivasan, Associate Professor in Econometrics, University of Madras, said the Centre’s motive to involve more private participation is clear from GDP to expenditure and revenue ratio. The tax revenue to GDP ratio has gone down from 9.74 per cent to 9.50 per cent. “But to control deficit with tax revenue declining, the government is cutting down on expenditure,” he said. “This way the Centre wants to put money into private enterprises that will help in the revival of the economy,” he added.
The government should have a mechanism to incentivise the States to spend the Centre’s funding efficiently. “Around 20 per cent of total expenditure of the Centre is transferred to the State as direct spending ability of the central government is limited,” he added.
[The Hindu Business Line]