Government will stick to target of 7% growth for FY20: CEA KV Subramanian

Government will stick to target of 7% growth for FY20: CEA KV Subramanian

The CEA also said that it is important to note significant upward trends in electricity and power generation.

Kamalika Ghosh

@GhoshKamalika

   

The government remains committed to its aim of achieving 7 percent growth in FY20, the chief economic adviser (CEA) KV Subramanian said on August 30.

India's gross domestic product (GDP) growth, while high, has shown some slowdown which is due to both endogenous and exogenous factors, Subramanian said.

"Impact comes, especially, from global challenges like Sino-American trade conflict," Subramanian said.

The CEA also said that it is important to note significant upward trends in electricity and power generation.

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"It must be taken note that globally electricity and power generation is a good leading indicator," he said.

He also said that the government is alive to the need of achieving $5 trillion target and is taking proactive steps.

The government has been taking all the necessary steps in short term and medium term in terms of structural reforms to take care of the situation.

"The investment rate actually seems to be picking up. The capacity utilisation is increasing now and is now comfortably above 76 percent if you see it along with electricity and power generation. So we would expect investment to be picking up in the coming quarters," Subramanian said.

The CEA also said that to achieve 8 percent growth, investment is critical.

India's GDP grew 5 percent in April-June 2019, official data released on August 30, 2019 showed.

The manufacturing sector grew 0.6 percent in April-June 2019 from 12.1 percent in the same quarter last year, and 3.1 percent in January-March, reflecting decelerating production activity in India's factory floors.

Muted household spending as reflected in metrics such as falling car sales have resulted in a pile up of unsold inventories and rising unused capacities in factory plants mirror slackening demand and feeble investment.

Construction sector GVA grew 5.7 percent during April-June, 2019, compared to 7.1 percent in the same quarter last year and 9.6 percent in January-March 2019.