Shivaji Sarkar
Indian economic developments do not cheer up the mood in the new year.
The mid-year economic review of the Government and RBI review brought simultaneously indicate further troubles ahead- moderation in growth, fall in tax revenue, rupee tumble, higher inflation and increasing joblessness.
The GDP growth rate has been moderated to 5.7 to 5.9 percent against 7.6 per cent projected in the Economic Survey. But chief economist of PHD Chamber of Commerce SP Sharma calculates the growth to moderate to 5.3 per cent.
Current account deficit trade deficit has reached a peak of # 16.4 billion, the highest ever in the first six months of the fiscal year.
From 1949 until 2012, Indian current account averaged minus # 1.2 billion reaching an all time high of $ 7.4 billion in March of 2004 and a record low of minus $ 21.7 billion in March of 2012, when the figures were at $ 12 billion.
The investment flow from the foreign sources has also slowed down in the wake of slowdown in the west and not so favourable domestic environment. Even of late foreign institutional investment (FII) coming for short-term particularly in the stock markets has slumped.
It is having severe impact on value of rupee, which hovers around Rs 55. The pressure is likely to continue through the New Year. It will lead to further inflation as purchasing power of rupee further decimates and imports of essential items including petroleum becomes expensive.
Whatever the Government may be claiming about a turnover in the wake of some moderation in inflation in wholesale price index, outlook looks difficult. The consumer price index (CPI) is showing stubbornness. Inflationary pressure on economy is likely to act as a brake on the growth process.
Slump in industrial activity, despite some supposed improvement in statistics, will put pressure on revenue mop up. Fiscal deficit may surpass the revised target of 5.3 per cent as corporate and services taxes are likely to miss the target owing to poor corporate showings.
The slowdown is also impacting customs and excise accrual, mid-year review indicates. It is also creating bad debt. The banks are having over Rs 450 lakh crore of bad debt called non-performing assets (NPA).
The Government could collect only Rs 9,400 crore from spectrum sales against targeted Rs 40,000 crore. Disinvestment has come up as a cropper. One only wishes that its hope of picking of growth. The NREGA on the contrary is an admission of the failure in creation of jobs.
The Government needs to look beyond the cliched and jargonized approach of “reforms”. It the country has to progress novel methods are required. The Government trying to shackle all industrial activities through administrative measures has only made the bureaucracy at all levels demanding the flesh. Nothing moves without paying a pound of flesh. Even a rail travel entails greasing the palm of the railway staff.
The country needs rules but it does not require rules that empower the bureaucracy. It purchases the officials, investors or industrialists, who do not kowtow them. The liberalization has not brought any change in the process.
If the nation has to survive it possibly needs less of Government, which must shed flab and reduce unproductive expenses like buying cars for its staff, do away with multiplicity of inspections, clearances, taxes and look for creation of a system that flourishes and with that the nation comes out of man-made blues. India has capacity to lead even if the West slides. (PTI)
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