Economy Outlook Still Cloudy an Immediate Stimulus Is Needed to Regain the Momentum to Get India Back to 8% Growth ‘Make in India’, Reforms for Improv- Strong Rupee
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https://telegram.me/TheHindu_Zone https://telegram.me/PDF4EXAMS EEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEE NOIDA/DELHI THE HINDU 8 EDITORIAL MONDAY, SEPTEMBER 4, 2017 EEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEE Economy outlook still cloudy An immediate stimulus is needed to regain the momentum to get India back to 8% growth ‘Make in India’, reforms for improv- strong rupee. It’s no use saying that ing ‘Ease of Doing Business’, in- since India is a net importing coun- creased access to electricity, im- try, our exchange rate should be provement in infrastructure and stronger. If we remove gold im- Perform or perish private investment are not picking ports, a large part of which is not A Cabinet reshue that was unusually up. This must become the big prior- for consumption but as store of ity. Initiatives such as Housing For value, then our trade decit will be ajit ranade free from political considerations All, Smart Cities and Digital India much smaller. Besides most of our give room for huge opportunities other imports are oil or capital or a change, performance, and not political ex- he government’s move this for private entrepreneurs. Of goods, both of which are price in- pedience, seems to have dictated the nature and past week to publish eco- course the corporate sector and elastic. The rupee needs to be Fextent of the shue in the Council of Ministers. A Tnomic data for the April to banks have been aected by the weakened or else it will hurt do- few of the poor performers have been shown the door, June quarter of this year needs a twin balance sheet squeeze mestic manufacturing even more. notably Ministers of State Bandaru Dattatreya and Rajiv look. The real growth of GDP, i.e. wherein corporates are over-lever- Pratap Rudy, and some of the better performers among after removing the impact of ina- aged, and banks have mounting Looking at demonetisation the Ministers of State have been elevated to Cabinet tion, was only 5.7%, much lower bad loans. Whether the new insolv- Finally, one must not forget the than expected. For the past six con- ency code and regulator and the continuing adverse impact of de- rank, including Nirmala Sitharaman, Piyush Goyal and secutive quarters, the growth rate Reserve Bank of India’s aggressive monetisation. The rst half of the Dharmendra Pradhan. Kalraj Mishra probably lost out has gone down steadily, from 9.2% intervention will crack this puzzle last scal year, that is the period because of the age factor, an indication that Prime Min- at the end of the quarter ending remains to be seen. prior to demonetisation, recorded ister Narendra Modi is serious about the 75-year-rule. March 2016, to 7.9%, 7.5%, 7.0%, a real growth of 7.7%. The present Four of the entrants are former civil servants, and two 6.1% and now 5.7% at the end of the Strengthening rupee April to June quarter’s growth at of them, Hardeep Singh Puri and Alphons Kan- June quarter. GETTY IMAGES/ISTOCKPHOTO Another signicant challenge to the 5.7% certainly includes the negat- nanthanam, are not even MPs. As Ministers with inde- This steady declining trend in aspire for. In nominal terms, one India report said that credit growth domestic industry is the ever- ive impact on the informal and the growth rate is all the more percentage less of growth trans- for the year ending last March was strengthening rupee. Since January rural economy. Investment and pendent charge, their mandate will be to single- troublesome because the economy lates into a loss of ₹1.5 lakh crore of the lowest in 63 years! the rupee is 7% stronger compared consumption spending which were mindedly focus on results without having to worry otherwise enjoys a rather condu- national income. This is a notional to the American dollar. It is postponed due to cash shortage about nurturing a constituency or reporting to a career cive combination of macroeco- loss, or is rather what might have A telling metric stronger than its Asian peer curren- might recover. But jobs that are lost politician. After her eventful stint in the Commerce nomic parameters. Ination has been. It also signies millions of The GDP is measured in at least two cies too, including China, the Phil- are lost forever. Even the Economic Ministry, Ms. Sitharaman was rewarded with the De- been moderate, and touched a low jobs not created. dierent ways. The rst is by look- ippines, Indonesia and Thailand. Survey warns about the deation- fence Ministry, making her only the second woman of 1.5% recently. Both trade and If you look closer at the num- ing at the production side while the This directly hurts our export pro- ary impact of low agricultural after Indira Gandhi to hold the portfolio. But the scal decits are moderate and bers, you nd that manufacturing second is by looking at the spend- spects. Since last October, our ex- prices. The agriculture sector GDP manageable. So they don’t eat up growth at 1.2% is the lowest in the ing side. We look at the aggregate of port growth has begun showing shows nominal GDP growth to be choices are also an indication of the small talent pool investible resources or precious past ve years. It’s the lowest since all spending, whether on consump- positive growth, after a long phase lower than real GDP, which is very before Mr. Modi. At the time he was sworn in, he in- foreign exchange. Even the interest we switched to a new methodology tion, or by foreigners buying our ex- of negative growth for 18 months. unusual. It means that farmers’ in- cluded in his team Arun Jaitley and Smriti Irani despite rate has been cut repeatedly over (based on Gross Value Added). ports, or on investments into new But thanks to the strong rupee, this comes will be depressed, and their having lost in the Lok Sabha election. Manohar the past year and a half. The inward Some of this downward movement factories and projects. In addition trend is weakening. Indeed our ex- doubling of farm incomes in ve Parrikar was asked to resign as Chief Minister of Goa to rush of dollars is at a peak, both in was caused supposedly by the sus- we also have government spend- ports are barely up 12% since Janu- years becomes that much more of a assume responsibility as Defence Minister, only to be nancial markets (stocks and pension of manufacturing activity ing. The growth in GDP can be ary, whereas imports are up more distant dream. sent back after the BJP all but lost Goa in the Assembly bonds) and as direct investment. prior to the rollout of the Goods traced to the growth and vigour of than 30%. Perhaps in the coming quarters No wonder the stock market index and Services Tax (GST) in July, and each of these components. Invest- More importantly, the strong ru- we may see a rebound. That will election this year. V.K. Singh, a former Army Chief who is at an all-time high. Even oil consequent de-stocking of invent- ment, which is between 30 and pee hurts the domestic industry crucially depend on a big pick-up in joined the BJP just before he was given the party ticket, prices, the bane of the Indian eco- ory. But it is also corroborated by 35% of the total pie, needs to grow since cheaper imports ood the manufacturing and private invest- was made Minister of State for External Aairs. Suresh nomy, have been stable and com- data from commercial banks. From at least in double digits. Investment country and eat into the market ment spending. The big structural Prabhu, who was sidelined in the Shiv Sena, was per- fortably low. Finally, the monsoon April to August bank credit shrank in future capacity creates GDP share of domestic players. The GST reforms of GST, the new insolvency suaded to join the BJP and given the important portfolio has been normal. So despite these by 1.8%, i.e. negative growth. This is growth of the future. It needs to be regime has given an extra advant- code, the new monetary frame- of Railways. And now, despite his oer to resign after a favourable macro factors, we have the lowest it has been for at least 13 led by the private sector. Currently, age to importer traders since the work and Aadhaar linkage are not managed to convert them into a years. If you remove retail loans that component is barely growing countervailing duty that they now measures which will show results series of rail accidents, he was asked to wait and then higher growth rate. such as housing and other personal at 1.5%. This is the single most pay as GST can be oset against in the medium to long term. What made Minister for Commerce and Industry. As cautioned in the Economic loans, credit to industry might ac- telling metric. As a result, capital other taxes, a concession which we need is an immediate stimulus Of course, it will be far from the truth to say that noth- Survey tabled recently in Parlia- tually be shrinking. This was formation (the basis of future was not available earlier. The big to re-inject the momentum to get us ing but performance has mattered. Ms. Irani, who was ment, it looks as if the growth rate agged back in April also when the growth) is steadily declining for jump in imports is also captured in to 8% growth. moved out of the Human Resource Development Min- will be below 7% this scal year.