Skip to main content

Indian economic 'slowdown': Big bang reforms fail to take off, Modi magic protagonists should 'rethink' now

By Our Representative
With the Indian economy officially slowing down to 5.3 percent (though experts calculated it earlier at 5.1 percent) during July-September 2014, from 5.7 per cent in the previous quarter, and credit growth hitting a 13-month low in September, Prime Minister Narendra Modi's promise to oversee a revival when he swept to power in May is beginning to be questioned. One of the most influential American dailies, "The Wall Street Journal" has said, with India’s economic growth decelerating, doubts have surfaced "about how quickly the country’s new government can deliver on pledges to end a nearly three-year slump and transform the world’s second-most-populous nation into a manufacturing powerhouse."
The paper underlines, while the GDP slipped to 5.3 percent from a year earlier for the three months that ended September 30, according to government data, manufacturing, which accounts for 15 percent of the economy, "was stagnant, expanding just 0.1%". It adds, while financial and business services may have strengthened, experts such as Shilan Shah, an economist at London-based Capital Economics, said growth for the quarter “is still very lacklustre by past standards—and in terms of what India can achieve at the moment.”
Commenting on the previous quarter's growth rate of 5.7 percent, the paper says, "Growth was modestly above the median forecast of 5.1% in a poll of 16 economists by 'The Wall Street Journal'. In each of the last two fiscal years, Indian growth has come in below 5 percent, the slowest such spell in decades."
It adds, "Starting in 2003, India’s economy grew 8 percent a year on average for nearly a decade, lifting millions out of poverty and creating a generation of young people with middle-class aspirations. The abrupt end of those halcyon years stirred voters’ perceptions that India’s previous government was ineffectual and corrupt, helping to vault Prime Minister Narendra Modi into office this spring... But a series of largely incremental steps by Modi has yet to cause the Indian economy to achieve liftoff."
The paper quotes Glenn Levine, senior economist at Moody’s Analytics, to say that the second quarter’s "jump" to 5.7 percent “an aberration... Exports and fixed investment, both growing from a low base a year earlier, had propelled the April-through-June uptick. Neither of those looks sustainable.” It adds, "A plan to streamline the sales-tax system, which the World Bank has called 'the most crucial reform that could improve competitiveness of India’s manufacturing sector', faces technological hurdles and resistance from state governments."
"Labour unions and their political allies will fight any attempt to relinquish the government’s monopoly on commercial coal production, an operation at the heart of powering the economy", the paper said, adding, despite more confidence than before, "The Indian economy doesn’t quite look poised to return to the near-double-digit growth seen in the 2000s. Exports fell 5 percent year-over-year in October. In September, production of consumer durable goods—motorcycles, televisions and the like—was down more than 11 percent from a year earlier."
Anjali Verma, an economist at PhillipCapital, has been quoted as saying, “The concern is that at the ground level, there is no material change taking place. In our interactions with companies, earlier they were telling us that activity would pick up early this year, then they said in the second half and now some are saying it may not happen until next fiscal year.”
Meanwhile, top British daily "Financial Times" has also noticed that the slowdown may not end so easily as earlier expected. It says, "Those who believed in the Modi magic may have to think again... The latest data show the Indian economy may be in for a more gradual recovery than some expected. The business world is still waiting for a series of much anticipated policy reforms - in areas from insurance to labour laws."
Analysing the latest slowdown, international news agency Reuters says that Modi's election had generated "euphoria" in the stock markets, but "with no major new legislation to encourage industry, growth is expected to have fallen back to 5.1 percent in the July-September quarter." 
Quoting finance ministry officials, it says, "The gross domestic product (GDP) figure could be as low as 5 percent", adding this could prompt Finance Minister Arun Jaitley to "use the weak performance to ask the Reserve Bank of India for a rate cut as soon as next week."
Reuters quotes executives as saying that "any pick-up in corporate demand for loans requires business confidence, which depends on Modi's government living up to its campaign promises. They want to see progress in reforming land acquisition laws, a controversial issue in India, as well as improvements in areas such as coal supply and transport infrastructure." 
It also quotes Isaac George, chief financial officer of GVK Power & Infrastructure Ltd, one of India's leading infrastructure builders, as saying that "the government needs to make it easier to do business in this country. Land acquisition is still a big problem."

Comments

TRENDING

World Bank clarifies: Its 26th rank to India not for universal access to power but for ease of doing business

By Our Representative
In a major embarrassment to the Government of India, the World Bank has reportedly clarified that it has not ranked India 26th out of 130 countries for providing power to its population. The top international banker’s clarification comes following Union Power Minister Piyush Goyal’s claim that India has “improved to 26 position from 99” in access to electricity in just one year.

"Misleading" satellite images being shared on Balakot surgical strike on Jaish camp

By Dr Vinay Kate*
With every passing day more questions are being raised about the surgical strike India did in Balakot as a response to Pulwama attacks. So far the Indian media has claimed mass casulaty of 300+ terrorists of Jaish-e-Mohammad in this surgical strike, but there is hardly any report from foreign media about the same.

Extreme repression, corporate loot, cultural genocide "characterise" India's tribal belt

Counterview Desk
As Lok Sabha polls approach, there is considerable ferment in one section of the population -- India's Adivasis, forming about 8.6 per cent of India's population. Things became particularly critical following the February 14, 2019 Supreme Court order, allegedly seeking to evict lakhs of tribals from their forest lands.

Industry in India "barely growing", export growth 0%, whither moral anchors?

Counterview Desk
In a sharp critique of the Modi government, the Indian Institute of Management-Ahmedabad (IIM-A), one of world renowned economist Prof Kaushik Basu, who is Professor of Economics and Carl Marks Professor of International Studies at Cornell University, has told students at the IIM-A’s 54th Annual Convocation on March 16, 2019 that they have a “special responsibility” on their shoulders, “the responsibility to reject narrow sectarianism, uphold scientific thinking, openness to new ideas, and freedom of speech.”

Gujarat model? Industrial effluents "invade" borewells, discharge coloured water in farms

By Rajiv Shah
In a major embarrassment for Gujarat model, of the 21 samples taken by officials of the state government's environmental watchdog Gujarat Pollution Control Board (GPCB) in two villages of Vadodara district and analyzed by its laboratory in Gandhinagar, the state capital, to find out pollution level in groundwater, 16 were assessed as highly contaminated – these were, in fact, found to be discharging reddish, brownish, reddish, or yellowish water.

Refugees as criminals? US govt report blames Amit Shah for calling Bangladeshis termites

Counterview Desk
The chapter “Freedom of Movement” of the US State Department’s “India 2018 Human Rights Report”, released recently, has criticized BJP chief Amit Shah for terming alleged Bangladeshis who may be in Assam as “termites”, because their names were struck down from the list of National Register of Citizens, under preparation in the state.
Pointing out that four million residents were excluded from Assam’s final draft list, leading to “uncertainty over the status of these individuals, many of whose families had lived in the state for several generations”, the report regrets, the Indian law does not even contain the term “refugee,” treating refugees like Rohingiyas as “any other foreigners.”
“Undocumented physical presence in the country is a criminal offense. Persons without documentation were vulnerable to forced returns and abuse”, the report says.
Text of the Freedom of Movement chapter: The law provides for freedom of internal movement, foreign travel, emigration, a…

Congress would win just 9 of 26 Lok Sabha seats: Gujarat Assembly segment-wise analysis

By Rajiv Shah
Even as the Congress plans its first working committee meet in Gujarat on February 28 after an almost 58 year gap, there is reason to wonder what is in store for India’s grand old party in a state which has been long been a BJP bastion – in fact ever since mid-1990s. Ahead of the then assembly polls in late 2012, talking with me, a senior Gujarat Congress leader, currently Rajya Sabha MP, frankly said he saw no reason why Congress would win.

"Pro-corporate" Supreme Court order on FRA would further marginalize Adivasis

By VS Roy David, JP Raju*
For millions of Adivasis and other traditional forest dwellers February 13, 2019 will go down in history as the day of apocalypse. This is like the proverbial Black Friday where millions of most marginalized people of India were ordered by malicious anti-people draconian Supreme Court order depriving them the life and livelihood by evicting them from their habitats.

Financial inclusion? Not micro-loans; India's poor "need" investment in health, education

By Moin Qazi*
India has grown into a global powerhouse. Its economy is soaring but the picture on the ground is still quite arid. The green shoots that you see are only a patch of its landscape. Most Indians are hapless victims of inequity. India is one country where intense poverty abounds in the shadow of immense wealth.

India, Pakistan told to eliminate nuclear weapons: N-war "would kill" 2 billion

Counterview Desk
The International Physicians for the Prevention of Nuclear War (IPPNW), a non-partisan federation of national medical organizations in 64 countries, representing tens of thousands of doctors, medical students, other health workers, and concerned citizens, claiming to share the common goal of creating a more peaceful and secure world freed from the threat of nuclear annihilation, has warned that “an unprecedented global catastrophe” awaits the globe against the backdrop of warmongering in India and Pakistan.