Fundamentals Of Economy ‘Very Very Strong’, Says Chief Economic Adviser Subramanian
Chief Economic Adviser KV Subramanian on Wednesday called upon the industry to start making investments, stressing that the fundamentals of the economy are "very very strong".
On more than Rs 40,000 crore of dues pending to small companies, he nudged large corporates to ensure timely payment to the micro, small and medium enterprises sector as small players are dependent on cash flows.
Large companies must play a critical role in clearing cash dues to smaller companies, he said at an event organised by industry chamber Federation of Indian Chambers of Commerce and Industry being attended by several corporates.
Finance Minister Nirmala Sitharaman on Monday had said that according to returns filed by large corporates to the corporate affairs ministry, as much as Rs 40,000 crore was due to the MSME sector.
The CEA further said the slowdown in the economy is due to a decline in investment, which is a key driver.
Corporates must recognise that in a slowdown labour is available cheaper and so it is the time to make investments, Subramanian said and added investment must be made from a long-term perspective.
"The government has been at its toes addressing various aspects of the economy," he said.
The CEA said the "fundamentals of the economy are very very strong...fundamentals of the economy have not changed" and it would be back on the 7-8 percent growth path.
Earlier this month, the Reserve Bank of India sharply cut its economic growth projection for this fiscal to 6.1 percent from 6.9 percent earlier.
The central bank's estimates come in the wake of gross domestic product growth sliding to a six-year low of 5 percent in the June quarter, on a massive slowdown in consumption and private sector investments.
As against India's real growth rate of 6.8 percent in 2018, the International Monetary Fund in its latest World Economic Outlook on Tuesday projected India's growth rate at 6.1 percent in 2019 and noted that the Indian economy is expected to pick up the next year at 7.0 percent in 2020.
On Sunday, the World Bank in its latest edition of the South Asia Economic Focus said India's growth rate is projected to fall to 6 percent in 2019 from 6.9 percent of 2018.