GST, Insolvency and Bankruptcy Code reforms to push growth after ‘clouds recede’, says Chief Economic Advisor

Govt. well-geared to cope with challenges of managing inflation, growth, fiscal balances and the Rupee, says V. Anantha Nageswaran

The pandemic and the ongoing geopolitical conflict may have “temporarily overshadowed” the government’s recent structural reforms like the Goods and Services Tax (GST) and the Insolvency and Bankruptcy Code (IBC), but they will spur India’s growth potential higher once these “clouds recede”, Chief Economic Advisor V. Anantha Nageswaran asserted on Wednesday.  

“We are right now in a situation where there are a considerable amount of challenges that we face for the Indian economy, both from global macro-monetary policy and geo-political developments,” Mr. Nageswaran said.

“Adroit and flexible policymaking” would be crucial to manage this year’s challenges of maintaining a sustainably high growth rate, moderate inflation, keep the fiscal deficit under balance, and ensure that “the external value of the Indian Rupee remains stable”, the CEA noted, adding that the Finance Ministry is well prepared for the balancing act this entails.  

“Naturally, there is no pre-programmed roadmap or a menu of options that would help us achieve these challenges… there will be adjustments as we go along in the course of the financial year as developments happen,” he averred.

Imploring people to “look beyond the current concerns over inflation, prices of oil, food, fertilizers, and central bank interest rates”, Mr. Nageswaran said India has emerged out of the previous decade with its financial system repaired and improved, and balance sheet strength in the corporate as well as the banking and financial sector.

“While we are definitely focusing on the near-term concerns and challenges. We need to understand that the medium-term fundamentals of the Indian economy remain solid and Indian economy is much better placed than many others in this world to face the challenges that we are currently encountering,” he noted at an event hosted by the Department of Economic Affairs (DEA) to mark the Azadi Ka Amrit Mahotsav celebrations of the Finance and Corporate Affairs Ministries this week.

“Some of the structural reforms that the government under the Prime Minister Shri Narendra Modi, ably assisted by the Honourable Union Finance minister in the last several years, such as the Goods and Services Tax, Insolvency and Bankruptcy Code, etc. might have been temporarily overshadowed by external developments such as the pandemic and now the geopolitical conflict,” the CEA remarked.