A Heart Breaking Friday News For the “Parivaar”

GDP Growth figure for July-September, ’19, has been revealed at 4.5%. This is worst in more than 20 years

Edited by Abhishek Vasudev; re-edited by Samuel Dhar;

updated: November 29, 2019 17:32 IST.

As can be seen below, the pace of economic growth has fallen below the 5 per cent mark for the first time since 2002, (During the first NDA regime, when GDP grew at 3.8 per cent) :

      Evolution: Annual GDP India

Date	Annual GDP	GDP Growth (%)
2018	2,718,732M.$	6.8%
2017	2,652,245M.$	6.7%
2016	2,289,754M.$	7.1%
2015	2,103,588M.$	8.2%
2014	2,039,127M.$	7.4%
2013	1,856,721M.$	6.4%
2012	1,827,637M.$	5.5%
2011	1,823,052M.$	6.6%
2010	1,708,460M.$	10.3%
2009	1,365,373M.$	8.5%
2008	1,224,096M.$	3.9%
2007	1,238,700M.$	9.8%
2006	949,118M.$	9.3%
2005	834,218M.$	9.3%
2004	721,589M.$	7.9%
2003	618,369M.$	7.9%
2002	523,768M.$	3.8%
2001	493,934M.$	4.8%
2000	476,636M.$	3.8%
1999	466,841M.$	6.9%
1998	428,767M.$	6.0%
1997	423,189M.$	4.1%
1996	399,791M.$	7.6%
1995	366,600M.$	7.6%
1994	333,014M.$	6.7%
1993	284,194M.$	4.8%
1992	293,262M.$	5.5%
1991	274,842M.$	1.1%
1990	326,608M.$	5.5%

As will be seen above, throughout the 10 yrs of UPA Govt, the only time the GDP was recorded below 5% was in 2008-2009, when the entire Globe was washed over by waves of sunami of recession, originated from USA, due to the profligacy of their banking system. When the entire world went into negative growth, Indian economy remained afloat on its own, due to skillful managements by the PM, who was an expert economist himself. The 10 yrs average GDP of the UPA was 7.75 and this when the average crude price over the 10 yrs period was US $ 88.100 per barrel as against the five year average during the present regime of US $ 50.100 a good 43% lower than the 10 yrs average during NDA. Despite the lower crude prices, the retail prices went up by an average of 22%. The Govt, therefore, had an advantage of 65% higher available revenue. At an average of 4.5 lakh of import bill per year, it amounts to a five years saving of 22.5 lakh crores. What did the Govt do with this extra cash in hand?  The Govt has a job on hand to explain the missing numbers. 

The pace of economic growth has fallen below the 5 per cent mark for the first time since 2002, when GDP grew at 3.8 per cent.

The slowdown during the last quarter was revealed in the official data released last Friday. Country's Gross Domestic Product or GDP grew 4.5 per cent in the second quarter of current financial year compared with 5 per cent in the previous quarter, and 7 per cent in the same period last year. The GDP data is worse than Govt estimates. According to a poll conducted by news agency Reuters, the most pessimistic estimate of economic pundits for GDP growth was 4.7 per cent for the quarter July-September.

Not only the overall GDP, almost every economic data has nosedived. In  the litigation affected Housing Sector, new development has come to a standstill. Cement production is down by 7.7%. Steel production is down to -1.6 %. Corporate investment is down, due to weak consumer demand. Private investment is down. Crude oil production is down 5.1%. Natural gas production is down by 5.7%. Coal production is down by 17.6%. The core industries have shrunk 5.8%.

Friday's data disappointed many economists who had pinned their hopes on the recently-concluded festive season for a pickup in demand. IIP is a negative 4.3%. Against a lowering of electricity consumption by 7.1%, its generation is down by 12.4%. Like all other data, industrial production is by 1.1%. Along with all economic data, the diesel consumption is at -3.3%. Exports are down by 6.6% as are the imports (-13.5%). With an expenditure figure of INR 16.55 trillion and a shrinking revenue, in just the first 6 months, the fiscal deficit is INR 7.2 trillion as on Oct 2019, 102% beyond the Govt’s annual target. Not even the clueless mandarins in the Govt know where it will end up in the next six months. With shrinking economic parameters, the corporates are constantly cutting costs. At least five major fastmoving consumer goods have been clocking single digit.

Unemployment is at a 45 years high; further 8 – 10 lakhs jobs are at risk. Auto sales are at a 19 years low. Growth of eight top core industries was at a historic low at 0.2%. Refinery production rose just by 0.4%.

A 5 trillion economy now looks a distant dream.

The government has, for the past year or so, been exuding confidence that economic growth will pick up soon. The reality has been just the opposite, despite a series of knee jerk measures to stimulate the economy, ranging from withdrawal of higher taxes on foreign investors, a mega merger plan for state-run lenders, housing stimulus and a reduction in corporate taxes over the past few months.

With her M Phil in International Studies, all around experience exposer since joining the BJP Govt, the first full time woman Defence Minister of India and now the Finance Minister, of its present dispensation, much was expected of the combative, glib talking Nirmala Sitharaman. She has not only not delivered, but has managed to push the Country’s economy, through a series of naïve policies, into a bottomless pit, where it is bound to languish till our concerned Minister is either a knowledgeable economists or/and have a more knowledgeable advisor to be listened to.

During a debate in the Rajya Sabha last Wednesday, Ms Sitharaman herself acknowledged the slowdown in economy and repeated, ad-nauseam, the hackneyed line, "Growth may have come down, but it is not recession yet or it won't be recession ever".

The Reserve Bank of India, a constitutional authority but no more and independent Central Bank of India, has been indulging in ad-hoc lowering of the repo rates to push-up the economy. Over the last 12 months, it has cut the repo rate five times totalling 135 basis points and is likely to be coerced to exercise a further cut the repo rate in December, by 25 basis points. That it will again be inconsequential, is a foregone certainty.

Solution

Supply follows demand. No one will produce unless his product is likely to be sold, i.e., the demand goes up. Demand can go up only if consumer has money in pocket. The consumer cannot have money in his pocket unless the employer puts it there. Not only the private sector, even the Govt and the PSUs have proved to be bad pay masters. Wages are not as per skills. There are unpaid wages. The Govt often chooses litigation against hapless employees. A country of 1.35 billion people, it should not be difficult to maintain an internal GDP of around 6%. With a global village, it should not be difficult to add another 2 – 3% to the GDP.

Instead of sinking billions as NPAs of loans to big industries, but SMEs, who will generate employment and pose lesser risk of loans turning NPAs. Bangladesh, a country that India created and that too, only in 1971 and which, before that, was an impoverished country, has not surpassed India as a faster growing economy, based on its big industries, but SMEs, financed through their Gramin Banks networks.

The present satrap is, however, more interested in relentless naked effort to capture power at all costs, by all means, under all circumstances with a façade of a strong leadership and dark clouds of blatant lies, criminal deceit, fake news and a prestitude media.