During the first five years of Modi – government i.e. 2014-15 to 2018-19, GDP [gross domestic product] grew @7.5% on an average. However, during the first and second quarter of current year, growth has slipped to 5% and 4.5% respectively. Actually, it started moving on a downward trajectory from the third quarter of last year when it was 6.6% followed by 5.8% in the fourth quarter. The average for these 4 quarters [3rd and 4th quarter of 2018-19 and 1st and 2nd quarter of current year] works out to about 5.5%. In comparison with the impressive growth recorded over a 5 year period, this is a significant dip of 2% but can’t be termed by any stretch of imagination as...
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Category: Growth & employment
Bail out to all and sundry – road to disaster
The banks – mostly public sector banks [PSBs] – are relentlessly fighting a battle to deal with unsustainable levels of non-performing assets [NPAs] those were caused by ‘indiscriminate’ lending [with hardly any or no ‘due diligence’ which is a fundamental requirement for funding any project] mostly to corporate sector particularly during a decade under erstwhile UPA – dispensation [2004-2014]. While, NPAs have declined significantly from the peak level reached as on March 31, 2018 [courtesy, a massive dose of recapitalization by the union government of over Rs 300,000 crore during the last 5 years as also rigorous governance norms including putting some of them under prompt corrective action framework], the stress is far from over. This is in view of...
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Digital Revolution – challenges and way forward
Having missed the first and second industrial revolution of 19th century and early 20th century respectively [courtesy subjugation of India to colonial rulers of those times] and even the third technology-driven revolution [this one was primarily due to the ‘protectionist’ and ‘inward looking’ policies which were not conducive to embracing technology], India is now in the forefront of the fourth industrial revolution – a digitally driven. The digital revolution is the shift from mechanical and analogue electronic technology to digital electronics which began anywhere from the late 50s to the late 1970s with the adoption and proliferation of digital-computers and digital record keeping that continues to the present day. The last five years have seen massive proliferation of affordable mobile...
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Growth hit by ‘fear’ and ‘distrust’ – really!
In the wake of further deceleration in GDP [gross domestic product] growth to 4.5% during the second quarter ending September 30, 2019 on top of a low of 5% during first quarter ending June 30, 2019, the former Prime Minister, Dr Manmohan Singh has launched a virulent attack on Modi – government squarely blaming the latter for what he terms as ‘disastrous policies’ and creating a palpable climate of ‘fear’ and ‘distrust’ in our society. While, delivering his valedictory address at the national conclave on economy organized by the New Delhi based Rajiv Gandhi Institute for Contemporary Studies, Dr Singh observed:- “There is a palpable climate of fear in our society today. Many industrialists tell me they live in fear...
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Too little and a little too late
The Govt has put a moratorium on pending spectrum payments for telecoms without altering the overall timeline of clearing all dues by 2030-31. But, given the huge amount to be paid, this won’t be of much help Vodafone Idea Limited (VIL) — a joint venture between UK-based Vodafone and KM Birla-owned Idea Cellular — and Bharti Airtel have reported a staggering loss of Rs 51,000 crore and Rs 23,000 crore respectively for the second quarter of the current financial year ending September 30, 2019. This is primarily due to a recent order of the Supreme Court (SC) directing telecom companies to give “unpaid” dues towards licence fee and spectrum usage charges (SUC). The order is the culmination of a long-drawn court...
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Giving push to second generation reforms
A section of the commentators is always on the prowl looking for the slightest opportunity to lambast Modi – dispensation irrespective of the state of the economy. During the first four years of its first term i.e. 2014-15 to 2017-18 when GDP [gross domestic product] figures were promising, they blamed the government for fabricating data. But, when the numbers were not so promising as during 2018-19 and first half of current year, they target it for allegedly doing great damage to the economy, loss of jobs and income earning opportunities. Unfortunately, in this blame game that gets hyper-publicity in the media, some of the transformative reforms undertaken by this government – reforms that will have lasting effect for generations in...
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Slowdown in growth – who is the culprit
The deceleration in GDP growth which commenced in the second quarter of the last financial year [FY] has continued during the current year even as the growth during the first quarter ending June 30, 2019 has plummeted to a record low of 5%. Moreover, there appears to be no sign of reversal even as the Reserve Bank of India [RBI] – in its latest [October 4, 2019] monetary policy review – has projected growth of just 6% for 2019-20 – down from its previous estimate [August, 2019 policy review] of 6.9% . Analysts have propounded several theories from purely cyclical to decline being of a ‘structural’ nature to doomsayers predicting that Indian economy is heading for a prolonged recession. The...
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Sagging GST collection – time to wield the stick
The finance minister, Nirmala Sitharaman has constituted a high level committee consisting of the representatives of the centre and states to study the reasons as to why tax collections under GST [Goods and Services Tax] have been slack and suggest measures to boost. The GST was launched on July 1, 2017. While, it may not be realistic to expect the desired buoyancy during the first year [as it takes time for the system to stabilize], during 2018-19, in all fairness, one would have expected the tax collection to pick up. But, the year ended up with big disappointment as the actual collection for the union government [it includes CGST (central GST), compensation cess and undistributed portion of IGST (integrated GST)]...
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Growth remains slack, despite booster doses
The downward revision in the GDP [gross domestic product] estimate for current year by the Reserve Bank of India [RBI] in its latest monetary policy review from the previous estimate of 6.9% [that itself was a significant reduction from the original 7.4%] to 6.1% now confirms the lingering fear of substantial deceleration in the economic activity that started from the second quarter of last year. When, the GDP growth declined to a six year low of 5% during the first quarter of current year, the expectation was that the growth momentum would pick during the 3rd and 4th quarter with the banking regulator projecting growth rate of 6.6% and 7.4% respectively. Now, if RBI itself is forecasting 6.1% for the...
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Booster for corporate India
Much will depend on how the surplus in the hands of companies resulting from tax cuts is apportioned among them and equally importantly, how it is spent In a flurry of announcements made on September 20, 2019 (also described in media circles as a third Union Budget in less than three months), Finance Minister Nirmala Sitharaman handed out a bonanza to the Indian corporate sector. The most pleasing announcement pertains to the steep reduction in the rate of corporate tax for new entities incorporated from October 1, 2019 in the manufacturing sector, that start production before March 31, 2023 from the existing 25 per cent to 15 per cent. After subsuming surcharge and cess, the effective incidence of tax will be lowered...
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