Resurgence of protectionism, trade tension a serious challenge to growth of Indian economy

The Indian economy has weathered the impact of demonetisation and volatility caused by the US elections well, but high oil prices, trade tension, resurgence of protectionism are some of the serious challenges to the growth of economy, said the Chief Economic Advisor Arwind Subramanian in a press conference post the Economic Survey.

New Delhi: The Indian economy has weathered the impact of demonetisation and volatility caused by the US elections well, but high oil prices, trade tension, resurgence of protectionism abd slowdon in exports are some of the serious challenges to the growth of economy, said the Chief Economic Advisor Arwind Subramanian in a press conference post the Economic Survey.

Speaking on the universal basic income scheme, he said that an unconditional and uniform cash transfer from the government targeted at poor is likely to cost around 5 percent of GDP.

Subramanian said that the scheme has already been tested as a pilot project in a small village in Madhya Pradesh, which needs further testing on a larger pilot project before taking a final decision on it. "​Universal Basic Income is a radical new idea; an idea whose time is right for deliberation, not necessarily for immediate implementation. It has other dimensions that needs to be discussed", said Subramanian.

He added that UBI can't be an add-on to other schemes. Universal Basic Income would be viable only if it replaces the existing welfare schemes.

CEA said that the impact of demonetisation will pay off in the long term and added that the full remonetisation of economy is expected to be completed in around two months time.

The climate we create for private investment and exports, we also need to target some specific sectors like we targeted textile sector last year, said Subramanian.

On the question of joblessness, he said that a focus on labour intensive sectors will help in dealing with underemployment of youth. 9 million migrants move across India for work. Though it is ot clear if there are actually 12 million people queuing up for employment every year, he said. 

 He also said that we need to address challenges of twin balance sheet problem. Festering twin balance sheet- balance sheet of corporates, and balance sheet of banks. The problem is much in large companies, these large companies have unmanageable debt.Focus on debt resolution.