Reviving The Flagging Economy

The government has taken a raft of measures to put growth back on track. But are they enough?

- Ashish Gupta

ECONOMY

WHEN PRIME MINISTER NARENDRA MODI returned to power with a stunning majority in May, stock markets were euphoric. They leapt to new highs as investor jitters about political instability faded and hopes rose that the new government would take pro-business measures to revive the flagging economy.

But it didn’t take long for a reality check. The benchmark S&P BSE Sensex began to tumble as investors woke up and smelt the coffee: Asia’s third-largest economy was in the throes of a slowdown and recovery looked distant. The Budget dampened sentiment further and foreign portfolio investors headed for the exits because of a new super-rich tax. Anxiety about India’s economy grew as the auto sector veered into the slow lane, manufacturing stumbled, and jobs remained scarce.

Stung by criticism of its inability to stop the economic downslide, the government announced a slew of measures to calm nerves and put the economy back on the growth path. Finance minister Nirmala Sitharaman rolled back the tax hikes on foreign and domestic equity investors and announced a ₹70,000-crore recapitalisation plan for public sector banks, among other moves.