Hyderabad: Finance Minister T Harish Rao on Wednesday said it was imperative for the Central government to empower States both in terms of financial resources and autonomy as States are the drivers of economic activity.
Listing out suggestions to address the current economic slowdown at the pre-budget meeting of Finance Ministers with Union Finance Minister Nirmala Sitharaman in New Delhi, Harish Rao said that with the exception of macroeconomic policies, much of the action in developing both physical and social infrastructure and providing an investor-friendly ecosystem lies with the States.
The Telangana Finance Minister, stating that the current economic slowdown was unique, pointed out that while inflation was low and external imbalances were modest, the decline began with a loss of confidence not among foreign investors, but among the country’s domestic investors and consumers.
“The growth has been hit more by domestic developments such as stalled investments, improper implementation of the GST, collapse of the NBFC sector, higher rates of unemployment resulting in decline in consumption and high non-performing assets in the public sector banks resulting in low credit growth,” he said, adding that one of the main concerns today was decelerating growth of GDP since 2016-17.
From 8.2 per cent in 2016-17, the growth of GDP decelerated to 7.2 per cent in 2017-18 and further to 6.8 per cent in 2018-19, Harish Rao said. The growth of GDP in the second quarter of the current year (2019-20) was just 4.5 per cent, the lowest since 2013, he added.