Start-up India
ECONOMY & POLICY

Start-up India

Going forward, India already is at, or is on the brink of, ‘Stagflation’ where we will see stagnation and inflation. The inflation is ‘cost-push’ led. We are also likely victims of ‘salad bowl stagflation’ where even though pump priming fiscal stimuli in one country fails to cure stagnation in that country, it could trigger inflation in other countries where the excess liquidity would land up. But several economists argue that we should not have an excessive obsession with ‘inflation targeting’ and should continue public spending to awaken India from its economic slumber.

The above is an extract from my column written in January 2021.

Going forward, India already is at, or is on the brink of, ‘Stagflation’ where we will see stagnation and inflation. The inflation is ‘cost-push’ led. We are also likely victims of ‘salad bowl stagflation’ where even though pump priming fiscal stimuli in one country fails to cure stagnation in that country, it could trigger inflation in other countries where the excess liquidity would land up. But several economists argue that we should not have an excessive obsession with ‘inflation targeting’ and should continue public spending to awaken India from its economic slumber.The above is an extract from my column written in January 2021. A year later and we have seen the economy struggle under inflation as demand has been sluggish sometimes owing to logistical and supply chain nightmares and sometimes due to simply having hit a sluggish zone. While the economy was hit by the second vicious COVID wave in the first quarter, the second quarter showed a quick recovery in urban areas. But rural demand, which was much more resilient during the first wave, saw a huge dent. Private consumption contributes around 55 per cent to the GDP and therefore plays a critical role in the GDP’s recovery and growth. Despite a tepid Q1, as the pace of vaccination accelerated and cases declined from a high of 400,000 a day to 40,000 a day, the economy began to purr again. Resultantly, Q2 saw a turnaround with a pickup in capital goods imports, production of capital goods and cement production. Rural consumption, too, exhibited recovery in Q2, backed by a buoyant rabi harvest, good kharif prospects, government transfers and the Mahatma Gandhi National Rural Employment Guarantee Act (MNREGA) programme.  Employment numbers improved in June-July and strengthened in September. While Q3 numbers for construction, too, may show some cheer, the sector has not regained its true momentum as during 2018-19 and 2019-20. However very far-reaching policy measures have been taken that can propel the sector in the future. These include a cut in corporate taxes, taxation reforms, introduction of the performance-linked incentive (PLI) scheme for 13 major sectors, enhanced focus on infrastructure development and asset monetisation by the Government, initiatives by the Government under the Atmanirbhar programme and proactive liquidity measures by RBI. The mega schemes – the National Infrastructure Plan (NIP) amounting to Rs.100 lakh crore or Rs.100 trillion and the National Monetisation Pipeline (NMP) involving Rs.6 lakh crore (see chart) – are also expected to provide a major thrust to infrastructure spending and uplift potential output.As we begin 2022, the virus has mutated and brought back fears of another wave. The Government is proactive and given our vaccination campaign, the country is likely to see a limited impact of this wave. India’s newfound success in inspiring innovation and entrepreneurship was validated as it added 33 unicorns (enterprises valued at over $ 1 billion each) in a single year and is the third highest hub for start-ups globally. At the 12th Cement Expo organised by FIRST Construction Council and Indian Cement Review magazine, keynote speaker Anil Agarwal, Additional Secretary, Department of Promotion of Industry & Internal Trade, Ministry of Commerce, Government of India, exhorted the industry to shed its traditional mindset and build value by embracing innovation.(See Page 42) Our cover story provides a bouquet of start-ups in construction and allays apprehensions that the sector does not foster innovation.Best wishes for new beginnings!

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