Video Editor: Purnendu Pritam
India’s vikas (development) has suffered a huge blow. NSO estimates are out and they predict a 5% growth rate for 2019-2020 – the lowest in 11 years. After the 2008 global financial crisis the growth rate, in 2009, was 3.1%. But in the last two years, the rate fell from 8.7% to 6.9% and now will be 5%. This is a steep fall. And it is much lower than the government's projections.
Now, you may ask what's new in this?
It will now take more time for the economy to recover
It's a domino effect, so chronology samajh lijiye. The Gross Capital Formation numbers are in tatters. So, the private sector has contributed only 1% to gross investment. All the growth is through government expenditure. That puts pressure on the treasury because tax collection rates are low as well. The government also failed to collect the required money through disinvestment and that has pushed the timetable further back.
The government must cut costs to control fiscal deficit.
And even then, they will have to save two Rs 2,000 crores to achieve the desired deficit value, which is close to 3.5%. If they cut costs, then vikas will suffer again. During times of controlled economic growth, a growth rate of 2-3% was called a Hindu Growth Rate.
When it comes to economic growth, India has certainly become a Hindu Rashtra.
Many economic reforms need to be made, with agriculture and labour being top of the list. But before any of this, the government needs to face the truth when it comes to the numbers. As in, the government needs to tell us the real Fiscal Deficit numbers which are exclusive of the budget. The right planning can only be achieved through the right data. Otherwise, the revival of this crashing economy is difficult.
The second thing is that even if we achieve all this, the RBI has warned that inflation might increase, which means no rate cuts. The NPA (Non-Performing Assets) are slated to increase next year so debt and reserves will be a huge obstacle for investment. Global conditions are also bad.
Many claim the Iran-US clash can also pose a challenge. If oil prices increase, then it will be a new headache for India. Weakening of the rupee will also increase inflation. Exports increasing doesn't look likely either. In such a case for those who blame global issues for India's economic slowdown, I would like to tell them that a major fraction of our problem is domestic. Global reasons indicate that we are looking in the wrong direction.
The Indian economy is under continuous attack and these factors weren't even masked. They came bare-faced. Just like the cops, the budget, until they come and solve the case, things can only go from bad to worse. Another question is, what kind of solution will it provide? If they apply some quick fix, then understand that growth will only get worse.
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