Amid slowdown in economy, Chief Economic Advisor (CEA) Krishnamurthy Subramanian has said the government has a well-thought-out agenda for reforms to beat current slowdown in the economy which is more cyclical than structural in nature. He mentioned ‘needless to say that there is a slowdown. But you estimate whether it is cyclical or structural by estimating the potential growth rate of the economy. If the growth potential has changed because of some structural aspects of the economy, then you can say that the slowdown is structural.’
Subramanian asserted private investment is key to economic growth and the recent cut in corporate tax rate was done to boost investments. In September 2019, the government had announced a cut in the corporate tax rate to 22% from 30%. It also lowered the tax rate for new manufacturing companies to 15% to attract new foreign direct investments. He added that investment is required for a sustained economic growth.
India’s Gross Domestic Product (GDP) growth slowed sharply to a pace of 4.5% in the second quarter of current financial year (Q2FY20) hit by a slump in manufacturing output. The pace of GDP growth has moderated from the 5% rate in April-June and 7% in July-September quarter of 2018.