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With the growth momentum back, the Indian economy is now all set to erase the bitter memories of the pandemic period by recording robust growth. The GDP figure of the first quarter of the present fiscal is indicative that the economy is slowly but surely returning to the pre-pandemic level. The manufacturing sector has recorded an impressive 49.6 per cent growth. More heartening is the fact that a number of employment intensive sectors too have registered growth after witnessing slump for a long period. These sectors are construction, trade, tourism, transport and communication, etc. GST collection is regularly crossing Rs. One lakh crore mark. This has happened nine times during the last 10 months. In the first quarter, profit of the corporate sector has increased, sale of commercial vehicles and steel consumption are on the rise. The demand for energy is also increasing.
Such a scenario has been absent since the pandemic broke out. With no growth in any sector, the wheel of the Indian economy came to a grinding halt. The economy contracted nearly 25 per cent and recorded negative growth in two successive quarters. At that time, many critics opined that it would take years for the Indian economy to get back the growth momentum. But, things started turning around from the third quarter of the previous fiscal. Easing of lockdown restrictions and the festive season helped the Indian economy to get back on the rail once again. Many termed the surge of the Indian economy as a temporary phenomenon, but all these speculations were proved wrong. Despite being hit by the second wave of the pandemic, the Indian economy is marching ahead.
Now, the rejuvenated Indian economy enters a critical phase. With the threat of a third wave of the pandemic looming large and the worldwide economy in bad shape, the Indian economy will have to take bold measures to sustain the growth momentum. Otherwise the remarkable turnaround will come to naught. To sustain the growth, few important measures should be taken. Among these, an increase in capital expenditure is a must. At present, we are not spending enough on capital formation. Capital expenditure has come down to 23.2 per cent of budget estimate in comparison to last fiscal’s figure of 27.1 per cent. Until capital expenditure is increased, it will be difficult for the Indian economy to sustain the present growth rate.
While the government should spend more on creating infrastructural facilities, the private sector should come forward to set up production units. Enhanced infrastructure may create demands. But it will be meaningless if there is no way to fulfil the demand. The private sector should step in to fill the void. Public-private partnership may be of great help in this regard. The government has already taken some steps to attract private capital in manufacturing and other related sectors such as the Atmanirbhar Bharat package, PLI scheme, etc. These steps are meant to ease the burden of the private sector. So, without wasting any time, both the government and the private sector should increase capital expenditure to keep the Indian economy vibrant.