Economic Highlights
New Delhi, 5 December 2022
Putting Economy Right
NUMBERS TELL GROWTH STORY
By Shivaji Sarkar
The country is having an interesting
story to tell as it goes ahead with over six percent growth, collects more GST
revenue, tackles data protection, manages MUDRA scheme NPA and ushers in
tighter lending system.This all, asFinance Minister Nirmala Sitharaman has to
tackle the demands of the industry, workers and the common man for preparation
of her budget.
There could be ease, as the per
capita income as per the IMF has jumped 57 percent.The 11 percent higher GST mop
up at Rs 1.46 lakh crore is a great breather.The government is trying hard to
keep the fiscal deficit in check at around Rs 16.6 lakh crore or 6.6 percent of
GDP. The OECD projects growth at 6.6 percent for the fiscal year. The NSO found
13.5 percent growth in the first quarter but moderates it to between 6.1 to 6.3
percent in the July-September period. The last two quarters may be a bit less.
The core sector growth in October touches 0.1 percent against last year’s 8.7
percent.
The GDP in the second quarter was Rs
38.16 lakh, higher by Rs 6.3 percent over the last year’s. The growth is in
sync with RBI forecast. But the ongoing monetary tightening and the global
slowdown pose problems. Lower manufacturing output by 4.3 percent at Rs 5.98
lakh crore is a concern. Though economy’s gross value addition is at Rs 35.05
lakh crore, a rise by 5.6 percent has given a moderate to private consumption.
It rises by 9.7 percent to Rs 22.29 lakh crore.
The government capital expenditure
has expanded to 49.5 percent to Rs 13.9 lakh crore. The government claims it would
sustain growth at between 6 and 7 percent. On inflation, Chief Economic Advisor
V AnanthaNageswaransays with expected softening, its impact would be
better.More than the individuals and families, inflation hits the government
hard upsetting its budget estimates and spiralling rise in costs of infra and
welfare programmes.
While Nageswaran is confident about
linking Aadhar, PAN and other instruments, there is concern as this is
compromising with data privacy, giving rise to cyber-attacks. It is now
suggested that the digital cards should be stand alone and linking these with
various instruments make the job of the fraudsters easier. As PAN records all
financial details, the cyber scamsters find it a ready instrument to capture.
The NPA concern is weighing heavy
despite tight fisted bank loan policy. Lending figures show rise in the
personal loan sector. The most important rationale for regulation in banking
is to address concerns over the safety and stability of financial
institutions, the financial sector as a whole, and the payments system.
Mandatory deposit insurance schemes are introduced in order to avoid bank runs.
The corporate wants softening of
rates and easy availability despite 12.6 percent more lending, highest since
2014. But neither the global conditions allow it nor the health of the domestic
banking sector. There are arguments for extending cuts in debt burden through
write-offs forsubsidising the corporate. The counter is extended that for the
last many decades the corporate had it aplenty and whether they need more
subsidies. Instead, costs could be cut, prices be reduced to boost demand, jobs
and the market growth. How could corporates remain parasite forever, is the
concern. They are also told that post 2008 Lehman meltdown, when Indian
corporate did not need, they were given heavy incentivised loans, 50 big business
houses not only pocketed it, they are also responsible for the highest ever
NPAs and write-offs.
It is another wonder why they cannot
thrive when the public sector is virtually being eliminated. Also, it is well
known that individually they have been siphoning off funds from their corporate
heads and thriving while letting the company to collapse.
The tight-fisted approach of the
government in regulating further lending is being appreciated widely. It is
also being stated that the government is right in encouraging business
competition and it’s not the government’s job to subsist forever. The government
is being rational in having a tough stance and virtually giving the message
that if they need funding, they could have external commercial borrowings. This
government stand has a wider support. In no case, the corporate could be
allowed to gobble up precious hard-earned people’s savings, that had become a
culture in pre-Narendra Modi era.
The SBI Chairman Dinesh Khara tells
the ninth SBI Economic Conclave that the banks have learnt their lessons from
earlier defaults and want a sustainable credit system. In the past decades, a
lot of promoter equity was nothing but hybrid debt. Today, the balance sheets
are much stronger, and the insolvency code is a great deterrent and instils
discipline. He finds liquidity is strong in the banking system.
The corporate in their pre-budget
meeting with Finance Minister Sitharaman suggested broadening the tax base by
rationalising GST and personal income tax slabs to boost consumption as the
external scenario remains murky and demand generation as also growth is
necessity, according to CII President Sanjiv Bajaj.
The Bharatiya Kisan Sangh Secretary
Mohini Mohan Mishra sought an input tax credit for farmers, removal of GST from
agricultural inputs, linking of the Rs 6,000 per year minimum PM Kisan Nidhi
income support with inflation. While ten trade unions boycotted the meeting the
Bharatiya Mazdoor Sangh (BMS), the labour wing of the RSS, demanded that the
government bring back the old pension scheme (OPS) for government employees,
which was replaced by the National Pension Scheme (NPS) in 2004. It also
demanded increase of minimum pension from Rs 1000 to Rs 5000. It is not a
burden on the government as the EPF corpus would pay it.
Many of the demands are likely to be
accepted. The higher Kisan Nidhi support may also suit the political needs as
eight States go to the polls in 2023 prior to the 2024 Lok Sabha elections.
The country’s remittances that had
plummeted during the pandemic, is likely to see a surge. It would increase the
forex reserves. The World Bank says that the remittances would touch $100
billion from the Gulf, US, UK, Singapore, Japan, Australia, and New Zealand.
The coming year is likely to have major
changes in the economy. The growth pattern would go beyond the statistics and
India could hope the dawning of a bright era with overall happiness being
bestowed on the country. ---INFA
(Copyright, India News & Feature
Alliance)
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