Attributing fall in India’s GDP growth to demonetisation and newly-rolled out Goods and Services Tax (GST) regime, Former Reserve Bank of India (RBI) governor C Rangarajan has said that the stimulus package being contemplated by the government to bolster the economy should emphasis on raising capital expenditure in order to catalyse private investment. He also made a case for recapitalisation of public sector banks (PSBs) so that they could provide more funding to the private sector.
For achieving a growth rate of 6.5 percent in FY18, Rangarajan has pointed out that the country would need to grow by at least 7 percent in the remaining three quarters of the current fiscal. Talking about demonetization move, he said that adequate preparation by the central bank could have reduced the pain which people had to undergo on account of ban on high value notes last November.
On the stimulus package, Former RBI governor has said that it should focus on increasing public expenditure with the aim to reinvigorate private investments. He suggested that two or three things can be done. Firstly, he noted that there have been a number of stalled projects, and the low hanging fruit is to ensure that these stalled projects are activated and those stalled projects which are viable must be immediately made operational. Secondly, he stressed on the need to recapitalization of the banking system so that they can provide additional credit for investment as well.