Refusing to label the current economic slowdown as ‘crisis’, Kumar said there has not been a negative growth in the two successive quarters and hence cannot be termed as a crisis.
“We are in the tail end of modest slowdown of the economy,” Kumar said while addressing the Economic Times Global Business Summit on Saturday.
“Though there has been persistent slowdown in seven quarters, the worst is behind us,” Kumar said.
GDP growth was a tad better in the third quarter of the current fiscal at 4.7% compared to 4.5% in the second quarter.
According to Kumar, India needs to ramp up exports but global trade is not conducive. “Rising tariff rates and rising protectionism is not good for global trade,” he said.
Kumar attributed the domestic slowdown to legacy of dragging financial and real estate sector inherited by this government.
“Economic managers have to grapple with legacy of high non-performing assets and high inflation,” he said.
“Financial problems when combined with real estate problems takes longer to normalise,” he said.
According to Kumar, the unprecedent disruption introduced by this government in the form of IBC and various other initiatives meant that status quo has been disturbed.
“This has meant that rules of the game have changed. There is now much more accountability on the private sector and government,” he added.
Terming the existing global trade scenario as a mess with the World Trade Organisation in near limbo, Kumar cautioned that the unprecedented increase in global debt to GDP ratio shows we are in turbulent times.
“The global monetary policy leverage is very limited, if at all. We have to prepare ourselves for a shock anytime,” Kumar said highlighting that $11-13 of debt earnings across countries have negative yields making us vulnerable to shocks.
Touching on the impact of technology on labour, Kumar said there is pure uncertainty on where technology is taking us. “There is danger of redundancy of labour all over the world,” he added.