To sustain growth momentum private investment must pick up, says ASSOCHAM President Sunil Kanoria

Chandigarh, June 1, 2016: At 7.6%, India's GDP growth rate for FY16 is at a 5-year high. This is good news and firmly puts India as the world's fastest growing major economy. However, the sustainability of this growth momentum will certainly depend on how well and how fast government can act to revive the investment climate.

"As of now, government is relying too much on its own resources for capacity creation in infrastructure and social sector schemes. Now concerted efforts are to be made so that private investment picks up. Once that happens, India will certainly continue to outpace its peers," said Mr. Sunil Kanoria, President, ASSOCHAM, reacting to the FY16 GDP figure.

"The Gross Fixed Capital Formation (GFCF) figure as a percentage of GDP has been shrinking for the fourth successive year, while our GDP continues to grow. This trend must change. For growth to be sustainable, GFCF figure must also increase. For that, revival of private sector investments is imperative," added Mr. Kanoria.

"The success of the 'Make in India' initiative hinges on some key reforms. In this context, introducing the Bankruptcy Code and getting it passed by both the Houses of the Parliament is a big step forward. Now we need its quick implementation as that would help resuscitate a lot of stuck projects and unlock capital. The government also needs to expedite the rolling out of the Goods & Services Tax (GST) by building political consensus. This is something which can be implemented instantaneously and it will greatly help in improving the investment climate. It would also send out a very strong signal to the foreign investors establishing this government’s pro-reform credentials,"he remarked.

"The pick-up in agricultural growth is a very positive development. Hopefully a good monsoon this year coupled with the steps announced in the Union Budget for rural development will provide a further spurt to the rural economy. Improving the irrigation network and mechanization of agriculture must figure high on government's agenda. At the same time, Centre must collaborate with state governments to improve the 'ease of doing business' so that more entrepreneurs can be groomed. For a country like ours where almost a million gets added to the workforce every month, creation of job creators is imperative," Mr. Kanoria concluded.