The economic slowdown and the search for solutions to rev up growth have now taken centre stage with more and more companies announcing shutdowns owing to piling up of inventories. Last week, the finance minister met the prime minister for a detailed debrief on the economy, while the week before, several industrialists, financial investors, bankers and real estate industry representatives met the finance minister to present their problems.

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In CNBC-TV18's special series 'Going for Growth', Latha Venkatesh spoke with former chairman of National Statistical Commission Sudipto Mundle, Chief Economist of Citi Samiran Chakraborty and Professor at SPJIMR Ananth Narayan to get their take on the problems facing the Indian economy.

According to Mundle, the country has been hit adversely by several shocks on the demand side at the same time. "The external demand growth is very low and that has been reflecting on our exports. On the internal story, there has been a huge decline in investment demand and on top of that, something people have not really taken much note of is an adverse shock in terms of expenditure compression. There is a relatively benign picture of slight slippage on the fiscal deficit but underlying that, there is a very large compression of expenditure to offset the large decline in tax revenue. So, all these are looking very negative. I am not at all surprised that growth rate went down and it is likely to go down even further this year," he said.

Chakraborty says the consumption demand in the last few years have not been supported by better jobs or higher income growth but more by falling savings and higher borrowings by consumers. "So, if you are already on a somewhat weaker footing, then all these shocks that Mundle explained have made the economic slowdown much faster than what a normal cyclical slowdown would tend to suggest," he observed.

Narayan thinks a lot of India's problems are structural. "Cyclical problem suggests if you just wait it out and may be a few nudges here and there, it will all come back to normalcy, I don't think that is the case at all. There could be a cyclical component but there are large structural issues," he opined.

To clarify his view, Narayan said: "The structural issues fall into two categories; one is stressed specific structures and second is the need for more reforms before investments can take place. Take sectors such as banking and NBFCs -- the entire financial services ecosystem, take the power sector, take airline and shipping, take telecom, real estate, construction, there are plenty of sectors which seem to be beset with deep structural issues right now. On banking and NBFCs there is a need for full capitalisation for both of them, there is need for recognition of bad assets in the case of NBFCs and there is a need for solution of the bad assets plus a focus on fresh businesses, all of which require a lot of deep reform and that is not forthcoming as of now. Power sector is another big mess which requires to be sorted out."

On investments, Narayan pointed out that there was no confidence at the moment that investment in India on a greenfield basis makes sense. "And that goes back to the need for the next stage of

big-bang reforms on factors of production -- land, labour and capital," he observed.

First Published:Aug 20, 2019 7:44 PM IST