Economic
Highlights
New Delhi, 5 September
Big Figures, Fragile Upturn
JOBS CAN SPUR CHURNING
By Shivaji Sarkar
Indian politics and economy are queering the
pitch. Politically feeble attempts are there with Telangana Chief Minister K
Chandshekaar Rao making the first move for talks with his counterpart in Bihar and
JD-U leader Nitish Kumar and RJD for cobbling up a difficult conglomeration or
not. Economically, it is a challenge despite a first-quarter growth of 13.5 per
cent but less than expectation of the Reserve Bank of India and job growth of 7.6
per cent that may not match the overall decline, including that in the public
sector.
The core sector has grown but a rate slower
at 4.5 per cent in July against 13.2 per cent in June. The fiscal deficit at
20.5 per cent even with Rs 30,307 crore dividends from RBI, Rs 7867 crore from
public sector banks falls short of expected revenue generation. Even with the
latest GST collection of Rs 1.44 lakh crore, 28 per cent rise, the total
revenue is unable to match the high government expenses and infra investment.
The Economic Affairs Ministry Secretary Ajai
Seth says that there are challenges due to oil price now rising to $102 a
barrel, possible slowdown in advanced economies and likely impact on exports
despite the fact India is much better placed than other economies.
There were sharp barbs on the economy by K
Chandrashekar Rao in Patna saying all sectors are in disarray. But it seemed
Nitish Kumar avoided making any comment. Despite the hype, it is apparent that
the opposition is yet to pick up the threads or do a study to challenge the
economic indicators. Their challenge to the BJP remains cosmetic as of now. The
revelry in the BJP camp at the sudden move of Nitish Kumar to leave the press
meet speaks volumes.
Overall there is a swing in the economic
indicators. The GDP growth to Rs 36.85 lakh crore, lower by 2.7 percentage
points of RBI forecast, remains one of the best in post pandemic situation even
as the country grapples with a difficult situation. It bars the Opposition from
taking an advantageous situation as the overall numbers are no less impressive.
The GDP in the first quarter is above the
pre-pandemic level. Further indications also come from the data that both
private consumption and investments have surpassed pre-Covid marks. The RBI in
August MPC has lowered growth rates to 7.2 per cent but the State Bank of India
puts it at 6.8, Goldman Sachs 7 and Moody’s at 5.2. In subsequent quarters
growth is predicted to moderate.
The farm sector has robust growth at 4.5 per cent
while services sector grew at 17.6 per cent. Private consumption, a key driver,
rose by 25.9 per cent indicating aspirational purchases and gross fixed capital
formations are on the rise. The manufacturing sector rise has been at 4.8 per cent
against 49 per cent a year ago indicate that still a lot remains to be
corrected. The growth in July is one of the slowest.
The National Statistics Office lowering of
April growth figures from projected 9.5 per cent to 8.4 per cent justifies the Finance
Secretary TV Somanathan’s contention that overall annual growth rate would be
between 7-7.5 per cent.
Another area that has not been so bright is the
contact-intensive-sectors like the trade, hotel and travel. Their output
remains lower than pre-2019 levels. It has just touched 16 per cent increase
against 20 per cent three years back. The sector is key to providing
employment. Its less than the desired growth which may be an overall indicator
of the job situation. After fall of jobs in four consecutive quarters the urban
jobs show a rise of 7.6 per cent, supposedly good for an emerging economy but
for Indian situation more is needed.
The good prospects of the first quarter may
not be easy to repeat in the subsequent quarters considering that more interest
rate revisions by the RBI are on the cards to contain inflation now at 6.82 per
cent and chances of it stabilising may be shaky as oil and food grain prices
may continue to rise. This is likely to push up input costs across the board.
Indian crude basket has become dearer by10 per cent to $102. This indicates the
recovery is still fragile after major shocks of the pandemic, lockdown,
note-ban and high penalty provisions of the GST.
The challenges are not easy. The private
sector, despite some increase in jobs post-Covid, is not good paymaster. Actual
job data is not known. There have been overall cuts in wages even in the best
of the companies apart many layoffs and retrenchments. Many data is being
collated. The severity needs to be gauged. The public sector that was adding to
the job figures of late goes through an uncertainty with many units on the sale
block. The railways known to be employing the highest numbers have decided to
do away with large number of jobs and turn many others into short-term
contracts.
The job creation needs a policy change but
not on the cards for now. The government has chosen to compromise on salary
bills because high fiscal deficit. The advisors need to tell the government
that it may visibly bring down the wage bill but may cause severe difficulties
for the country as more jobs are actually lost leading to a vortex of low
consumption, penury and likely rise in crimes. It would stress the policing,
not efficient in most States across the country. If not improved, it might add
to aggravation of the law and order situation.
The flip side is, according to the Brookings
report, India has 70.6 million people living in extreme poverty and those
earning $4 a day number over 200 million. It is just not the urban poverty but
the rural poverty too is showing signs of increases. The social stress is
increasing. The stress on coffers is forcing to have second thoughts on free
food dole to 800 million. During 2018-20, unemployment led to 16081suicides, Union
Minister of State for Home Nityanand Rai told the Rajya Sabha.
These are signs of uneasy situation for a
country that is mulling to create a society that has high happiness index. The
K-shaped growth can put the industry in a graver situation. Despite impressive first
quarter figures, and touted fastest growing economy, it is not booming. Changes
in infra policies and priorities are must to move out of the morass for a fast
growth and bettering of social conditions. Else a political churning may not be
out of place. --- INFA
(Copyright, India
News & Feature Alliance)
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