Indian economic slowdown due to lagged effect of reduced investment: CEA Krishnamurthy Subramanian

Chief Economic Advisor Krishnamurthy Subramanian said, "The virtuous cycle originates from private investment, which affects the economic growth with a lag and thereby consumptions."

New Delhi: Chief Economic Advisor Krishnamurthy Subramanian on Friday (January 31) said that the global economic slowdown is partly to be blamed for the slowdown in the Indian economy while addressing a press conference.

The CEA said, "There has been a slowdown in the Indian economy. Part of it is because of the global economy itself slowing down. You can see the world, the advanced economies, and emerging economies have all slowed down in 2019 as compared to the average for 2014 and 2018." 

Asserting that the economic slowdown since 2017 is due to the lagged effect of reduced investment, he said, "The virtuous cycle originates from private investment, which affects the economic growth with a lag and thereby consumptions."

He also said that according to an analysis wealth created by entrepreneurs benefit everyone, including employees and suppliers.

"The year 2013 was the peak when the share of corporate loans reached their peak. After that, it has decreased... Firms that actually borrowed a lot more from 2008 to 2012 were indeed the firms that also invested less from 2013 to 2017," Subramanian said.

Subramanian said that the Economic Survey 2020 is a synthesis of old and new ideas and shares contemporary evidence with ancient ideas, adding that theme of wealth creation for economic survey was based on the remarks of Prime Minister Narendra Modi in his Independence Day address. 

The CEA said, "On August 15, Prime Minister spoke about wealth creation and mentioned that wealth creators need to be respected because wealth cannot be distributed unless it is created," adding "Finance Minister also insists that those who create wealth are indeed India`s wealth."

"The cover of Economic Survey, which is lavender, captures the new Rs 100 note and combines the old with the new. The economic survey is a synthesis of the ideas of old and new," he said, adding "In terms of ideas, the economic survey combines contemporary evidence that are shared with ancient ideas. Therefore, it is a synthesis of the ideas of old and new." 

Earlier in the day, Finance Minister Nirmala Sitharaman tabled the economic survey 2020. The survey said that the country`s gross domestic product (GDP) is projected to grow at a rate of 6 to 6.5 per cent in the next financial year 2020-21.

(With Agency Inputs)