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Amid sustained food inflation and high dependence on Chinese goods, economists and policymakers discussed several challenges and possible solutions ranging from the need to revisit inflation targeting mandate, boosting private investment, consumption and China’s over capacity during the first pre-Budget consultation meeting chaired by Finance Minister Nirmala Sitharaman on Wednesday.
The Finance Secretary, Secretaries of Departments of Economic Affairs, Revenue, Financial Services and Corporate Affairs; and Chief Economic Adviser along with prominent economists from corporates, rating agencies and academics were present in the meeting ahead of the General Budget 2024-25 presentation next month.
Ashwani Mahajan, the National Co-Convener of Swadeshi Jagaran Manch (SJM) said there was a consensus that the steps taken by the government for protecting the domestic industry and promoting manufacturing through PLI are proving to be good and it should continue and that there is need to push private investment and consumption.
“Measures should be adopted to boost investments from the Indian venture capitalist (VC) and the startups. We also need measures to boost urban demand. In the past few years, especially after COVID-19 there has been an improvement in the public investment and along with the capex. There is further need to boost private investment. And for that, whatever measures can be adopted in the budget should be adopted,” Mahajan, who was among the economists in the meeting, said.
Another member who took part in the meeting said that concerns were flagged regarding China’s over capacity and the emanating threat to the Indian industry. This comes after the US and EU recently slapped tariffs on Chinese electric vehicles (EVs) which has left Indian manufacturers and exporters worried over dumping in Indian markets.
Former Chief Statistician of India TCA Anant suggested that there is a need to revisit the inflation targeting mandate with the divergence between Wholesale Price Index (WPI) and Consumer price index (CPI) witnessed during the last decade and that India should move towards Producer Price Index.
“My suggestions on how to strengthen statistics better included that the finance ministry should make use of the GST data better. They should create an institutional framework in which it can be used. It will help address a lot of the questions which people are raising about what’s happening to domestic trade, international trade,” Anant said.
