Mindful of rising unemployment and poor economic growth, Prime Minister Narendra Modi emphasised on the need for initiating second generation reforms across all sectors, and directed policy makers and thinkers to put their heads down and work towards strengthening the fiscal scenario.
Lack of credit flow was identified as one of the major reasons behind sluggish economic growth during the two-hour-long interaction of the Prime Minister with economists and professionals from various sectors, which was held at Niti Aayog.
In fact, several economists underlined the need for major reforms in the banking sector, suggesting among other things, opening up foreign direct investment (FDI) in banking which would help in fund infusion to the tune of $250 billion and thus open up credit flow which is currently stuck, sources aware of proceedings told this newspaper.
Advocating that “major surgery” was needed in the financial sector to boost economy, measures to improve credit flow like recapitalisation of nationalised banks and merger of small banks with bigger ones, were suggested.
With the focus of the meeting mainly on job creation, Modi told the experts that the economic reforms initiated in 1991 had helped in bringing India to the global economic forefront. However, he said, now there is a need to give a fresh impetus to those initial steps by introducing second generation reforms to further propel the Indian economy.
Aware of the long-term impact of a declining economy, top sources privy to developments said that Modi indicated during the meeting that it took him five years to establish confidence among the people, and now that people have reaffirmed their faith in him, it is time to fulfil their aspirations and address these issues by getting down to work.