The current episode of investment slowdown is ongoing, and one that is impacting growth, and therefore investment revival needs to be prioritised urgently to arrest more lasting impact on growth, said the Economic Survey.
Signalling the likelihood of some steps being taken to boost investment in the Budget, it said, “The policy conclusion is urgent prioritisation of investment revival to arrest more lasting growth impacts, as the government has done with plans for resolution of bad debts and recapitalistion of public sector banks.”
To help India regain 8-10% growth, the Survey suggested that the measures, that need to be taken soon, should include easing further the cost of doing business and creating a clear and stable tax and regulatory environment. The government must create a conducive environment for small and medium industries to prosper and invest to help revive private investment. “The focus of investment-incentivising policies has to be on the big and small alike. The ‘animal spirits’ need to be conjured back,” it said.
The Survey raised concerns over slowdown in savings saying that too was ongoing. However, investment slowdown was more detrimental to growth than savings slowdown.
Referring to the simultaneous slump in savings and investment, the Survey asked, “Should policies that boost investment (substantial infrastructure push, reforms to facilitate the ease of doing business or the ‘Make in India’ programme) be given greater priority over those that boost saving?”