Indian Economy is in deep crisis

GDP means for you and me
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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