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Indian Economy is in deep crisis

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GDP means for you and me

India is witnessing overall economic slowdown but the Modi government remains in denial and this is for the first time in the history of India that the government of India has categorically refused to accept critisim or suggestions from the experts or the Opposition. The Indian economy is in deep crisis and finance minister Nirmala Sitharaman is reluctant to acknowledge the very fact.

The Narendra Modi government is in second term and therefore, in principle, cannot criticise the decisions or the financial reforms undertaken by his own government during first term – the demonetisation and the hurriedly implemented GST which still has several slabs.

The unemployment is at historical high accompanied by deepening agrarian distress and growth is on a historic downfall which are having a devastating impact on the livelihood conditions of the vast majority of the people. The Central Statics Office (CSO) revealing that the real GDP growth in Q1 of the current fiscal plunged to a six-year low of 5 per cent, is a big cause for worry.

India’s economy is basically a domestic economy and problems do lie in growth and employment. The slowdown has been across mining, manufacturing, and construction as illustrated by index of industrial production (IIP) data coupled with the sharp slowdown in financial, real estate and professional services and private final consumption on the expenditure side, is worrisome. The automobile industry that employs nearly four crore people and contributes 7.5 per cent to the country’s GDP and 49 per cent to the manufacturing GDP is in deep crisis.

On Sunday, the top six carmakers reported a 29% drop in August sales, stoking fears that the slowdown could get still worse. Ex Prime Minister Manmohan Singh highlighted that apart from industry sector, the rural India is in terrible shape. Farmers are not receiving adequate prices and rural incomes have declined.

“The low inflation rate that the Modi government likes to showcase comes at the cost of our farmers and their incomes, by inflicting misery on over 50 per cent of India’s population,” he said

Nirmala Sitharaman had also unveiled a mega plan on August 30 to merge 10 public sector banks into four to create fewer and stronger global-sized lenders. However, the merger of banks into four lending shops will not make any difference as running entities will not make them efficient or bring in quality.

Finance Minister has allayed fears of job losses following the proposed merger of public sector banks, but many believe that future promotions will be stopped with no salary hike.

In modern economies, employment challenges are multidimensional, with employed people harboring major concerns in a wide range of areas, including security, health and work-life balance, income and distribution, training, mobility, and opportunity. Government should consider the many dimensions of employment that affect welfare.

India is divided into 3 categories: Super rich who have no dearth of money; 40 crore are middle class and 80 crore who are trying to survive. However, good quality jobs are missing while low level jobs are available.

One reason why quality jobs are missing is that the manufacturing sector is stuck at 16 per cent of GDP for almost three decades. This sector can create quality jobs even for the less-educated. Service sector jobs are usually for the better educated and trained and the data suggests that most of the development took place in the service sector.

With unemployment at a 45-year high and low levels of education-India’s demographic dividend is at risk, according to an IndiaSpend analysis of data from the United Nations Population Fund (UNFPA) and the Indian government, and research from the Reserve Bank of India (RBI).

The unfolding scenario is scary as not a single industry has been set up, India can only become a assembly unit with make in Indian which implies low skilled labourforce.

Finance Minister Nirmala Sitharaman, recently, said, she cannot decide the GST cut, one of the issue the automotive segment is demanding for motor vehicles, but that the GST Council will take the final call on reducing the tax rate on motor vehicles.

When the Home Minister can unilaterally decide to lockdown Jammu and Kashmir to abrogate Article370, how come a finance minister cannot decide to decide on GST cut which is for the betterment of the economy and the people. It is high time to use the mandate for the welfare of the people.

Government should stop behaving like a pigeon who closes eyes on seeing a cat, thinking she doesn’t exist.

arti

Blog : By Arti Bali,
(Senior Journalist)

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Rahul Gandhi returning to lead Congress again?

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scindia rahul gandhi priyanka gandhi

New Delhi/Wayanad (Kerala), Dec 6 : Former Congress President Rahul Gandhi is all set to return to lead the party and is likely to take over after the Delhi assembly polls early next year. A hint to this effect was dropped by Congress General Secretary, Organisation, K.C. Venugopal who said that country wants his leadership more now.

Venugopal, who is accompanying Gandhi to his Kerala constituency Wayanad, told reporters: “The nation is going through a critical phase… The party needs his leadership and there is loud chorus from the workers to bring him again and we hope he will listen to them.”

A Congress session is scheduled in the next few months to ratify the appointment of interim President Sonia Gandhi. A source said that in the same meet, a chorus will grow to bring again Rahul Gandhi as planned by young leaders in the party.

Rahul Gandhi’s elevation to the party organisation was first demanded at the AICC’s Hyderabad session in 2006 where workers from UP raised slogans in his favour and he was made party General Secretary in 2007. After that, the demand to make him Vice President was raised at the brainstorming session in Jaipur in 2013.

He was elected President unopposed in 2017 after demand from different quarters of the party, but during the 2019 General Elections, the party was routed under his leadership and he resigned in May taking the responsibility of poll debacle and did not budge to the party’s repeated requests to reconsider. In August, Sonia Gandhi was appointed interim party chief.

Though he may not be the party chief, but Rahul Gandhi’s decisions are evident within the party’s decisions as evinced by appointment of Nitin Raut as minister in the Shiv Sena-Congress-Nationalist Congress Party coalition government in Maharashtra and of Nana Patole as the Assembly Speaker.

The party is finalising a venue for the AICC session, which could be held in the Congress-ruled states of Madhya Pradesh or Rajasthan in January and February, a source said.

By: BY SAIYED MOZIZ IMAM

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RBI holding repo rate bodes well for savings: Economists

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Reserve Bank of India RBI

New Delhi, Dec 6 : Even as many see the RBI’s pause on repo rate as a setback for the growth, some economists argue that any further cut could have affected households savings which have already seen a decline in recent times.

“Reduction in interest rate will work negatively. The interest rate is like a double-edged sword. It will have an impact on savings and it will have an impact on investments. We know very clearly that it does not have much impact on investments. Now, what is it doing? It is basically hampering the savings,” said N.R. Bhanumurthy of the National Institute of Public Finance and Policy (NIPFP).

He also said that monetary policy is not just about interest rates.

“There are many things which monetary policy does. It can ensure that credit flow is better and the banking sector is in good shape. They can create money supply. So, it can do many things. They have to now see how savings could be improved,” the NIPFP professor said.

M. Govinda Rao, Chief Economic Advisor, Brickwork Ratings, said that transmission of the reduction in the policy (repo rate) requires the lending rates to fall. Further, that would also require the deposit rates to fall, which could result in reduced saving by households.

“When the inflation rate is perking up, if the banks also reduce the deposit rates, the rate of return on savings will decline which could not only reduce the incentive to save but also can hurt the elderly who maintain themselves from the interest income,” he said.

As per Economic Survey of FY19, gross savings fell nearly 60 basis points as a share of GDP in two years to 30.5 per cent in 2017-18. Household savings led the decline as its share contracted from as high as 23.6 per cent of GDP in 2011-12 to 17.2 per cent of GDP in 2017-18.

“The household sector savings declined from 23.6 per cent of GDP in 2011-12 to 17.2 per cent in 2017-18 and its net financial savings and a ratio of GDP declined from 7.2 per cent to 6.5 per cent during the same period. Thus, besides inflationary expectations, ensuring adequate real rate of return on the savings could be an objective of keeping the repo rate constant,” Govinda Rao said.

As against market expectations of a rate cut, the RBI on Thursday maintained the policy repo rate at 5.15 per cent. With this, the reverse repo rate also stands unchanged at 4.9 per cent. The Monetary Policy Committee (MPC) was unanimous in its decision to maintain status quo on both rates and ‘accommodative’ stance.

(Nirbhay Kumar can be contacted at [email protected])

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Immediately probe the encounter: Legal experts

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Hyderabad Murder Encounter

New Delhi, Dec 6 : Legal experts say as per the law a probe should be immediately set up into the mysterious encounter of the four accused in the rape and murder of a Hyderabad-based veterinarian.

“The rule of law should prevail in the country, there should be an immediate inquiry into the encounter of the accused,” said senior advocate Vikas Singh, former President of Supreme Court Bar Association.

A week after the brutal gang rape and murder of the young veterinarian in Hyderabad, police shot dead all the four accused in an alleged ‘encounter’ near Shadnagar town.

The accused were killed in the early hours of Friday when they allegedly snatched weapons from the police and tried to escape from Chatanpally near Shadnagar, about 50 kms from Hyderabad.

Singh emphasised that there should be balance between justice delivery system and human rights of the citizens. “The authorities should immediately begin an inquiry into this encounter, and this probe should be completed as soon as possible. The authorities should ascertain whether it was a genuine encounter or it was stage managed by the police,” added Singh.

The four accused killed in the encounter were identified as lorry drivers Mohammed Arif (26) and Chintakunta Chennakeshavulu (20), and lorry cleaners Jollu Shiva (20) and Jollu Naveen (20). All hailed from the Narayanpet district of Telangana.

Senior advocate Puneet Mittal said that there should immediately be a judicial probe into the matter to unearth the real picture behind this mysterious encounter. “The probe should be on the factors that were behind this encounter. The families of the accused could also move the court seeking inquiry into the matter,” added Mittal.

Senior advocate Sanjay Parekh said according to the law the encounter should be looked into as killings. “As per law, a case should be registered against the police officials involved in the alleged encounter followed by a probe,” said Parekh.

He also insisted that usually the action of the police officials claiming self defence comes into the picture at the stage of the trial, but at this stage of the case there should be a probe immediately to verify the encounter.

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