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Suresh Prabhu, India’s Sherpa to the G-20 – M_VEDHAN
Suresh Prabhu, India’s Sherpa to the G-20 – M_VEDHAN×
Long-term financing of infra projects is a challenge, says former Union Minister
India needs to focus on key sectors with a ‘pull effect’, such as automobiles, real estate and hospitality, logistics and transport, to emerge from the economic slowdown that has worsened due to the Covid-19 disruptions, said Suresh Prabhu, India’s Sherpa to the G-20 and former Union Minister.
Speaking at the BusinessLine Knowledge Series webinar on ‘Economy, Trade and Investments: Challenges Ahead’ on Thursday, Prabhu said: “We have to work on certain structural changes to take our economy from $2.9 trillion to $5 trillion. Due to the novel coronavirus our priorities have changed. There are resource constraints. So, to come out of it, we have to work on certain sectors which can have a pull effect.” He was in conversation with Raghavan Srinivasan, Editor, BusinessLine. The webinar was powered by Indian Institute of Plantations, Bengaluru.
Automobile, the mainstay of India’s manufacturing, should be a focus sector, said Prabhu. “Most of the stable blue collar jobs are in this sector. It also pushes the services sector. When you buy a vehicle, you need to service it, which leads to a tremendous pull for the services sector,” he said. Higher tractor sales could also boost agriculture, he added.
Boosting real estate
Another crucial sector is real estate, which is heavily labour-intensive, said the former Commerce & Industry Minister. “If you pull that sector, it will also create demand for manufactured products. Increase in demand for steel and cement will create employment and revenue for the people. The PM’s vision of housing for all can also be fulfilled,” he said.
For boosting hospitality, tourism, logistics and transport, one anchor sector has to be chosen, Prabhu said. For instance, if aviation improves, the related upstream and downstream sectors will benefit.
A detailed plan to improve infrastructure is already being worked out as the sector will create jobs and add to the GDP. However, the issue of financing infrastructure is a challenge as private investments are vital, he said. “For infrastructure, long-term papers maturing after 15-20 years are needed. We have to develop our secondary market and debt market,” he added.
Prabhu further said India has to improve its share of global trade and, to do that, it has to work out a strategy and get more market access in other countries. “This could be done through the World Trade Organisation and we should look at reviving it,” he said. It can also happen through free trade pacts and it needs to be seen how these could be made better for India.
To reduce imports, India has to manufacture more and for that it needs to attract investment-driven FDI, he added.