India's manufacturing growth decelerates to 2.7%, consumption-led GDP at 6.3% "unsustainable": Economists

By A Representative
Even as the Government of India continues to bask in glory over Gross Domestic Product (GDP) rising from 5.7% to 6.3% in the second quarter of 2017-18, two senior economists have come up with data to suggest that there was deceleration in key sectors like agriculture, manufacturing and construction, and, "more importantly, in investment".
Without questioning the methodology of the Government of India, which is under fire for creating a hype around GDP growth, the economists RK Pattnaik and Jagdish Rattanani, who are with the the SP Jain Institute of Management and Research, have said, it was largely a "consumption-led growth."
Not only agriculture should be an area of concern, for it has "shown a significant slowdown at 1.7%, against 4.1% in Q2 of 2016-17", even manufacturing has recorded "deceleration along with construction, where growth has been at 2.6%, down from the 4.3% witnessed in Q2 of 2016-17", the economists say in their analysis "Behind GDP data, some signs of concern".
Insisting that "these developments raise some questions on the soundness and sustainability of the growth trajectory", the economists say, "The stressed balance sheets of banks and corporations continue to act as a drag on investment activity", adding, a comparison of the relevant quarters (Q2 2016-17 with Q2 2017-18) shows that Gross Value Added (GVA) went down from 6.8% to 6.1% and GDP growth down from 7.5% to 6.3%."
Say the economists, "a critical look at the data shows that on the supply side" the sectors where growth is supported is mining, "which recorded a 5.5% growth as compared with 1.3% in Q2 of 2016-17", and "trade, hotel transport and communications... along with public administration and defence."
But add, "On the demand side, growth rates of government final consumption expenditure (GFCE) at constant prices recorded an estimated increase of 4.1%, against 16.5% during Q2 of 2016-17... The growth of private final consumption expenditure (PFCE) moderated at 6.5%, compared with an increase of 7.9% in Q2 of 2016-17..."
The economists predict, "Higher car sales and enhanced international passenger traffic indicate the swelling of urban consumption expenditure. In the near term, the urban and government consumption expenditure will go up due to the impact of the Seventh Pay Commission award. Besides, higher sales of two-wheelers and tractors point to some upward movement in rural demand."
However, they underline, "The stressed balance sheets of banks and corporations have continued to act as a drag on investment activity. Households’ investment in dwellings, other buildings and structures have remained subdued as inventories rise on the hope of steep price corrections."
Giving the example of Mumbai, the economists say, "In the Mumbai Metropolitan Region alone, an estimated 350,000 houses (52% of inventory) under construction are unsold, according to Cushman & Wakefield and realty data analytics firm Propstack."
The economists quote Reserve Bank of India (RBI) to say that "new investment proposals declined significantly in Q2 of 2017-18 in terms of both numbers and value. Only 403 new projects were announced, the lowest since Q1 of 2004-05. Plant load factors in thermal power plants underwent a sustained decline, largely reflecting weakness in demand from financially stressed distribution companies."
Questioning "the predominance of consumption-led growth" as a matter of "serious concern in terms of sustainability", the economists say, it "can arguably lead to a slackening of future growth", as noted by RBI, which showed how it was found to have "a negative impact on GVA growth one-year ahead by 1.39 percentage points at 5% statistical significance level."

Comments

History, culture and literature of Fatehpur, UP, from where Maulana Hasrat Mohani hailed

By Vidya Bhushan Rawat* Maulana Hasrat Mohani was a member of the Constituent Assembly and an extremely important leader of our freedom movement. Born in Unnao district of Uttar Pradesh, Hasrat Mohani's relationship with nearby district of Fatehpur is interesting and not explored much by biographers and historians. Dr Mohammad Ismail Azad Fatehpuri has written a book on Maulana Hasrat Mohani and Fatehpur. The book is in Urdu. He has just come out with another important book, 'Hindi kee Pratham Rachna: Chandayan' authored by Mulla Daud Dalmai.' During my recent visit to Fatehpur town, I had an opportunity to meet Dr Mohammad Ismail Azad Fatehpuri and recorded a conversation with him on issues of history, culture and literature of Fatehpur. Sharing this conversation here with you. Kindly click this link. --- *Human rights defender. Facebook https://www.facebook.com/vbrawat , X @freetohumanity, Skype @vbrawat

Urgent need to study cause of large number of natural deaths in Gulf countries

By Venkatesh Nayak* According to data tabled in Parliament in April 2018, there are 87.76 lakh (8.77 million) Indians in six Gulf countries, namely Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and the United Arab Emirates (UAE). While replying to an Unstarred Question (#6091) raised in the Lok Sabha, the Union Minister of State for External Affairs said, during the first half of this financial year alone (between April-September 2018), blue-collared Indian workers in these countries had remitted USD 33.47 Billion back home. Not much is known about the human cost of such earnings which swell up the country’s forex reserves quietly. My recent RTI intervention and research of proceedings in Parliament has revealed that between 2012 and mid-2018 more than 24,570 Indian Workers died in these Gulf countries. This works out to an average of more than 10 deaths per day. For every US$ 1 Billion they remitted to India during the same period there were at least 117 deaths of Indian Workers in Gulf ...

Ongoing hunger strike in Ladakh draws fresh attention during PM’s Arunachal visit

By A Representative Prime Minister Narendra Modi visited Arunachal Pradesh recently for two days. During his speech, a student from Keladha Adi District displayed a banner that read, “Stop the hunger strike, give Ladakh their rights,” in support of Ladakh climate activist and innovator Sonam Wangchuk. The student was later detained by the police. The incident drew attention to the ongoing hunger strike in Ladakh.

A comrade in culture and controversy: Yao Wenyuan’s revolutionary legacy

By Harsh Thakor* This year marks two important anniversaries in Chinese revolutionary history—the 20th death anniversary of Yao Wenyuan, and the 50th anniversary of his seminal essay "On the Social Basis of the Lin Biao Anti-Party Clique". These milestones invite reflection on the man whose pen ignited the first sparks of the Great Proletarian Cultural Revolution and whose sharp ideological interventions left an indelible imprint on the political and cultural landscape of socialist China.

Uttarakhand tunnel disaster: 'Question mark' on rescue plan, appraisal, construction

By Bhim Singh Rawat* As many as 40 workers were trapped inside Barkot-Silkyara tunnel in Uttarkashi after a portion of the 4.5 km long, supposedly completed portion of the tunnel, collapsed early morning on Sunday, Nov 12, 2023. The incident has once again raised several questions over negligence in planning, appraisal and construction, absence of emergency rescue plan, violations of labour laws and environmental norms resulting in this avoidable accident.

India's health workers have no legal right for their protection, regrets NGO network

Counterview Desk In a letter to Union labour and employment minister Santosh Gangwar, the civil rights group Occupational and Environmental Health Network of India (OEHNI), writing against the backdrop of strike by Bhabha hospital heath care workers, has insisted that they should be given “clear legal right for their protection”.

Civil society groups unite to oppose Rajasthan anti-conversion Bill, urge Governor to withhold assent

By A Representative A coalition of civil society organisations, rights groups and faith-based associations has strongly condemned the passage of the “Rajasthan Prohibition of Unlawful Conversion Bill, 2025” in the State Assembly on September 9, calling it draconian, unconstitutional and a direct attack on the fundamental rights of minorities. The statement was released at a press conference held at Vinoba Gyan Mandir, Jaipur, where representatives of more than a dozen organisations declared that they would actively lobby against the bill and urged the Governor not to grant assent, but instead refer it to the President of India under Article 200 of the Constitution.

Supreme Court: Outsourcing jobs in public institutions cannot be used as a tool for exploitation

By Raj Kumar Sinha* Ahead of the Assembly elections in Bihar, the issue of contract workers has heated up. A few days ago in Patna, around 9,000 land survey contract workers arrived at the BJP office demanding their jobs be made permanent and for the payment of outstanding salaries. These contract workers, who are involved in land measurement, were then subjected to a police baton charge. The protest had been going on for a month at the Gardanibagh strike site in Patna, Bihar. According to the contract workers, they have been working in various government offices, including the Revenue and Land Reforms Department, for years but do not receive the same rights and benefits as permanent employees. Their main demands are "equal pay for equal work" and guaranteed service until the age of 60.

Job opportunities decreasing, wages remain low: Delhi construction workers' plight

By Bharat Dogra* It was about 32 years back that a hut colony in posh Prashant Vihar area of Delhi was demolished. It was after a great struggle that the people evicted from here could get alternative plots that were not too far away from their earlier colony. Nirmana, an organization of construction workers, played an important role in helping the evicted people to get this alternative land. At that time it was a big relief to get this alternative land, even though the plots given to them were very small ones of 10X8 feet size. The people worked hard to construct new houses, often constructing two floors so that the family could be accommodated in the small plots. However a recent visit revealed that people are rather disheartened now by a number of adverse factors. They have not been given the proper allotment papers yet. There is still no sewer system here. They have to use public toilets constructed some distance away which can sometimes be quite messy. There is still no...

Counterview

Search This Blog