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Economy

CEA Krishnamurthy Subramanian: Economy fundamentals very strong; large companies need to lead the way for recovery

Updated : October 16, 2019 01:35 PM IST

The government is on its toes in responding to the needs of the economy and fundamentals remain very strong, chief economic adviser Krishnamurthy Subramanian said on Wednesday, addressing slowdown in the economy.

He urged companies to invest in the economy as during a slowdown, reasoning that labour is relatively cheap, making it a good time for investments.

Subramanian added that in his role as the CEA he wants to nudge large corporations to honour their contracts in order to lead the economic recovery.

The government is on its toes in responding to the needs of the economy and fundamentals remain very strong, chief economic adviser Krishnamurthy Subramanian said on Wednesday, addressing slowdown in the economy.

Indian economy is undergoing a continued slowdown with most sectors showing signs of strain and the markets being tepid. The government has tried to address the issue with corporate tax cuts, walking back on stringent corporate social responsibility (CSR) norms, and announcements addressing individual sectors among other efforts.

The Reserve Bank of India (RBI) has also reduced its repurchase rate for its past five monetary policy committee (MPC) meetings, to lower the rate to 5.15 percent.

However, the government and central bank’s stimulus efforts have only yielded short-term relief.

Subramanian has said that the fundamentals of the economy remain “very, very strong” and the government’s efforts will yield result albeit with a lag.

He urged companies to invest in the economy as during a slowdown, reasoning that labour is relatively cheap, making it a good time for investments. Micro, Small and Medium Enterprises (MSMEs) depend on cash flow cycles and it is incumbent upon the large companies to clear the dues of MSMEs and set a benchmark, he said.

Subramanian added that in his role as the CEA he wants to nudge large corporations to honour their contracts in order to lead the economic recovery.

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