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Election to be fought on economy
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Bikky Khosla | 04 Mar, 2014
The nation is in election mode. Political leaders are spewing all sorts of rhetoric, addressing rallies, taking on each other; different calculations are being predicated -- the same old things we see before every general election. But there is a welcome shift this time -- the major parties are talking more about growth and less about subsidies and freebies. This gives impression that the coming election will be fought on economic policies -- something we have hardly seen in the past.
Amid this chaos, GDP figures for the third quarter were released last week, showing a fall in economic growth to 4.7% in third quarter from 4.8% in the previous quarter. Earlier, the CSO pegged GDP growth at 4.9% for 2013-14, an estimate which now requires the economy to grow at a rate of 5.5% during the current quarter. At this moment, it looks an uphill task. The government has also committed to cutting the fiscal deficit -- which already crossed 95% of the budget target -- for which they have to cut government expenditure drastically in the current quarter.
The Q3 report card of the economy shows that most of the growth came from financing, insurance, real estate & business services which grew 12.5%, a torrid growth rate but mainly fueled by the RBI's massive FCNR deposits attracted by means of its swap window facility. Other major contributors are electricity, gas & water supply and trade, hotels, transport and communication. In sharp contrast, the industrial sector showed a very dismal performance, with manufacturing contracting 1.9%. These figures point to the long-time sufferings of the sector growth of which slowed from 7.4% in 2011-12 to 1.1% in 2012-13 and likely to contract 0.2% in 2013-14.
Investment is another major area of concern. Gross fixed capital formation shrank in the December quarter to 27% from 29.4% in the previous quarter, showing the dismal state of investment demand. These figures clearly show how difficult implementation has remained despite the government's tall assurance that it has been doing its best to prop up investments, particularly in infrastructure sector, without which the potential gains from liberal economic policies can hardly be realized.
Are our political leaders really concerned about these economic challenges? Their ongoing campaign rhetoric certainly shows that there is a growing recognition of the fact that the current macroeconomic issues are going to drive the mood of the voters in the coming election. But rhetoric is not enough. What the economy desperately needs -- no matter whichever party or alliance comes to power -- is a stable government that could live up to its promises on economic recovery and push economic growth in real sense.
I invite your opinions.
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State of Indian Economy
B S Malik | Wed Mar 26 06:37:50 2014
Apart from low growth rate of economy, more worrisome is the nature of growth-which is mostly jobless, as it is dominated by services and not manufacturing. Job Growth even during heyday of GDP growth (average 8%) has been a paltry 0.2%. Worker's wages(of unorganised sector)have stagnated in real terms unless until the effect of NREGA came to effect during last 2/3 years. At the same time Chinese workers' wages are increasing@ 10 % or so per annum.
Question arises as to how long this lop sided growth model will sustain.
way forward is there; Heavy public investments in Agriculture, Transport Infrastructure and building of social infrastructure (say 50,000 top class schools and same number of well equipped Health Centres) along with all out support to manufacturing (aimed at satisfying requirement of neglected 80% Indians)can only redeem the situation.
Unfortunately corporates are blind to long term reality and they seek to depend upon quick fixes suggested in the modi-nomics. During last 3/4 years corporate stopped investing and through its own media put pressure on government also to keep away from public investments. Result has been low growth and still lower growth of public well being.
It is therefore up to the corporates to recognise the need of public expenditure-which will prime the economy for higher growth trajectory.
election to be fought on ecconmy
Ravi Ajitsariya | Thu Mar 6 14:57:47 2014
This is a far cry. In India, political parties never remain honest on election expenses. So, the same story will be seen on the election 2014. However, the major investors including the FDIs, are waiting for a stable government. The real estate business will grew up as soon as the scene is clear. Let us hope for a better one.
Election 2014
m shah | Thu Mar 6 05:32:35 2014
Ours is world largest democracy- real freedom can only provide best result if we elect government - which has majority in house- we as citizen must put efforts to create awareness- understanding- and maximum voting.
economy & election
a.s.rangaraju | Wed Mar 5 13:44:11 2014
This is not for the first time.Refer to past election periods. /- 6 months this target continues, then starts the real faces. It is all political gimmick. No trust in present day politics.
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