Letters

Reviving the economy

| Updated on September 10, 2019 Published on September 10, 2019

 

This refers to ‘Getting the economy to turn around’(September 10). The causes of the slowing down of economy are manifold, and to arrest the deceleration the government must move fast on the reform path. An enhancement of cash inflows to households to propel consumption of goods and services and to nudge the propensity to save are critical to energise the market, besides pushing private investment. Supply of credit by the banking sector at a lesser rate of interest is imperative to boost manufacturing as well as trigger demand for housing and consumer durables.

The stressed power and automobile sectors are contributing to the rise in unemployment and their knock-on effects are multifarious. To combat the situation, policymakers must give more thrust to creating adequate infrastructure facilities in the agriculture and MSME sectors. Development of the rural sector is critical to transforming agriculture as a job creator, and this will prompt the youth to treat it as a permanent entrepreneurial activity.

VSK Pillai

Kottayam

Tackle structural issues

The identification of the nature of the slowdown — whether it is on account of “structural or cyclical” issues — would help in solving the issue. If it is “cyclical’, the country would not be facing four quarters of continuous decline in GDP. The very fact that there is a decline in savings, consumption and investment activities prove that something has drastically gone wrong, “structurally” impeding sustained growth. The auto industry is facing production cuts with Ashok Leyland being the latest to join the group. There are continuous job losses on account of the same. Private consumption, which constitutes more than 50 per cent of GDP, has got impacted on account of continuous job losses. Gross fixed capital formation (GFCF), which indicates the trend in investments, is also seeing a free fall. As far as exchange rate is concerned, it is showing a declining trend with the RBI refusing to intervene and allowing the market forces to take care of the same. But there is a muted export and domestic demand for various products. In this scenario, it is critical that ₹1.76-lakh crore transferred by the RBI is productively deployed by the government to address the structural issues to resurrect the economy.

Srinivasan Velamur

Chennai

Climate finance

This refers to ‘Changing trends in bank credit, post denomination’ (September 10). The entire spectrum of bank credits has been succinctly dealt with. However, it is imperative that climate financing gets its due focus by banks. Climate finance is the new buzz word. Climate change was the major theme during the recent G20 summit, where India stood firm on carrying on with the Paris agreement. Green bonds, blue bonds, green corridors and green initiatives are gaining traction across our nation. Banks could set up climate financing departments. Bankers would need to be trained on monitoring, evaluating and recovery of climate-related loans. Major river clean-ups is one area that would definitely require huge amount of funds.

NK Bakshi

Vadodara

Revitalising the auto sector

At a time when auto sales continue to decline, it is more than important to establish market-friendly policies and boost consumer sentiment. Due diligence while allocation of funds and commercial viability of production activities demand that existing valuations and market competitiveness be preserved, in order to safeguard investor-confidence.

While incentivising manufacturers and buyers, development of advanced infrastructure is needed to speed up the launch of e-vehicles. Hitherto, a low number of charging-points and a high purchase price have hampered the growth of e-vehicles. These vehicles promise low-noise, zero hydro-carbon emission and minimal maintenance costs. It is also a pre-requisite to develop e-highways, offer charging stations in residential/commercial spaces, improve existing facilities, develop on-spot metering and payment services.

Girish Lalwani

New Delhi

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Published on September 10, 2019
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