Economic growth in the second quarter (July-September) of 2017-18 is expected to soar to 7- 7.5 per cent on the back of good monsoon and clarity over GST, Niti Aayog's new Vice-Chairman Rajiv Kumar said today.
India's GDP growth rate slid to a 3-year low of 5.7 per cent in the first quarter (April-June), mainly on account of a slump in manufacturing.
"I am confident that in the July-September quarter, economy will grow by 7-7.5 per cent. Destocking, which was in anticipation of GST rollout, has completed and now, there is more clarity on the new tax regime," said Kumar during a media interaction here, who today took over as Vice-Chairman replacing Arvind Panagariya. "Also, monsoon is good. Many IPOs are in the offing. FDI and FIIs are also increasing."
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The noted economist, however, cautioned against taking the June quarter growth blip as a trend.
On the effect of demonetisation, he held that it impacted growth in the first quarter as by then the currency shortage triggered by the scrapping of Rs 500 and Rs 1,000 notes on November 9 last year was over.
Kumar explained the growth slide in terms of destocking by manufacturers in anticipation of GST rollout from July 1.
Referring to former prime minister Manmohan Singh's statement that demonetisation would hit economic growth by about 2 per cent, Kumar said quarterly data cannot be used to derive such conclusions.
"With due respect to my mentor Manmohan Singh, this quarterly data cannot be used to say look GDP will drop by 1 -2.5 per cent... There has been successive drop in GDP growth. There is a historical experience, every country which has taken fundamental governance reform has seen shrinkage in output," the vice-chairman of the premier think-tank added.
Pitching for formulating a policy to generate jobs, Kumar said, "We need to develop our own models. That model will have meet the critical task of generating jobs... Whether it is unemployment or under-employment, it's not the point. The point is we have created jobs, we have met aspirations of young people."
Kumar termed issues related to farmer's distress as "real phenomena, not imaginary".
"I am in favour of making agriculture more remunerative. And I also believe that the government should reduce interferences in the agriculture sector," he observed.
Asked by when the Aayog will finalise its 15-year Vision Document, Kumar replied that a great amount of work has gone into it.
The new vice-chairman signalled that he wants external advisors to join the policy body and would like to work with groups of states.
Kumar talked of his priority, which is to carry forward the spirit of Team India for a better future, keeping in mind aspirations of millions across the country.
He also underlined the need to bring in out-of-the-box thinking and ideas to bring about transformational changes to fulfil the prime minister's dreams of a Shreshtha Bharat.
Noting that policy making should not be elitist and rather should be rooted in ground realities, Kumar made the point that "participative governance involving various sections of society can ensure development becomes a mass movement".
Kumar also said he intends to visit all states over the next three months.
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