Besides spending on building infrastructure, the government should focus on exploiting natural resources the country has and look at stake sale in most PSUs.
Public sector firms have the potential to produce three-times more than the current output and should be operated independently, he told here.
"I think it (economy) will bounce back. It has tremendous potential. I see light at the end of the tunnel, it is not far. The economy will kick start soon," he said adding the rollout of Goods and Services Tax (GST) had a temporary impact but it is being straightened now.
Indian economic growth plunged to an 11-year low in the July-September quarter when it clocked 4.5 per cent expansion. The government has forecast a 5 per cent GDP growth for the full 2019-20 fiscal that ends in March but many experts believe the growth rate will be lower than the projection.
Agarwal, the founder and chairman of Vedanta, said the government cutting tax on companies to the lowest in the world will attract investment but companies need a little hand-holding to see their projects through.
"India has the lowest tax in the world and a natural place for investments to come in. If somebody wants to do business in a democratic country, India is the best place," he said.
The government in September last year cut the corporate tax rate to 22 per cent from 30 per cent and in the budget for 2020-21 announced reduction in personal income tax rates for those who were willing to give away present exemptions and rebates.
"When you start a project anywhere in the world, the government makes sure the project is completed. In India, you are left alone."
Apart from environmental norms, all other regulations for businesses must be relaxed, he said.
Also, a free hand must be given to producers of natural resources such as oil and copper as they can then rapidly scale up production and help cut imports, he said. "A free hand to produce will cut short time."
Agarwal said India has tremendous resources of gold, copper, oil and other minerals and they should be explored and produced. "Don't hold licenses, auction reserves. As long as government revenues and interest, as well as the environment, are protected, they should allow companies to produce. They should not tell how it is to be produced."
India imports oil, gold, coal and copper, he said. "We import 85 per cent of our oil requirement. We import almost 100 per cent of our gold requirement. We import a lot of coal. Today, our imports are close to USD 400 billion. This might increase," he said advocating harnessing the full potential of resources within the country.
Besides, the government should sell its stake in public sector companies to allow professional boards to run them.
"PSUs have the potential to produce three times more than what they are currently doing. A public sector bank has a valuation of USD 1 billion but a similar-sized private bank would have 10 times higher valuation, why? Because the government bank is being controlled by a bureaucrat. That has to go," he said.
He said the massive investment in infrastructure such as road and highways, ports and airports will revive the economy and foreign investors are eager to invest in such projects. ANZ MR