The uncertainties will persist till a Government with a convincing majority takes control and changes its track to pro-people, and not just pro-corporate, oriented policies
Despite having strong fundamentals, the Indian economy did not perform well in 2013. The concerns ranged from rising inflation to a falling rupee, from a slowdown in the manufacturing and FDI flows to increasing education costs and depleting levels of domestic savings. The corollary to this lies in India’s below five per cent growth rate — the country’s lowest in recent years.
Therefore, 2014 begins with heavy baggage, despite what Union Minister for Finance P Chidambaram would want us to believe. He says that India's economy is on its way to recovery and will grow at five per cent in the financial year 2013-2014. Experts say that the economy has bottomed out and, by logic, has to move up. The burning question is: WhenIJ
Neither the Planning Commission Deputy Chairman Montek Singh Ahluwalia nor rating agency Moody's agree with Mr Chidambaram. Mr Ahluwalia, while addressing students at the Indian School of Business in Hyderabad, said: “I don't think at the moment we have signs of strong revival yet but I do get a picture that people think that the economy has bottomed out”.
The economic data the Government just put out bears hope. Economic output for the the July-September quarter grew by 0.4 per cent because of a healthy farm output, a revival in exports and some narrowing of the current account deficit. But former Finance Minister Yashwant Sinha says that statistics could be shown to be attractive by making it ‘manually’ move a few points.
The latest data also shows growing disenchantment among the youth as unemployment surges to 11 per cent. Each year almost one crore youth join the job queue. With an all-round slowdown, it is not just the youth who are unemployed; even mid-career professionals are jobless, as industries fire workers for a slimmer workforce. Consumer inflation is a concern, says Reserve Bank of India Governor Raghuram Rajan. A 11.24 per cent rise in consumer inflation, and almost 18 per cent food and vegetable inflation combine to give an average inflation increase of 41 per cent in three years. This shows that the poor are the worst hit, forcing the Government to come out with a food security law and accept that over 67 per cent (or 81 crore of the 121 crore population) remain hungry. This has not only increased the subsidy bill of a weak Government but has also led to direct confrontation at World Trade Organisation's Bali meet.
The ouster of Ms Jayanthi Natarajan from the Union Ministry of Environment and Forests is yet another testimony of corporate dominance over Government functioning. The ‘profits only’ approach cannot be the basis of governance, ignoring basic public good.
High costs are impacting the country. Domestic savings, that had so far been fuelling growth, are plummeting. With an overall slowdown, Government revenue collections will be hit hard. The growth figures hinge on an unexpected surge in agriculture to over 4.6 per cent. But that remains the neglected sector, despite over 70 crore people depending on it. To some extent, the economy has moved on because of a small increase in rural income. This is creating a large divide between industrial and agricultural India and there is limited effort to bridge the gap.
The currency too has suffered, crashing nearly 25 per cent against the US dollar during the year. The rupee remains at a low of Rs 62. The political uncertainty linked to the general election is making foreign investors wary and hampering investments. Much depends on the outcome of the polls. The uncertainties will persist till a Government with a convincing majority takes control and changes its track to pro-people, and not just pro-corporate, policies.
