State of the economy

Concern over the economy has grown with the projection that GDP growth is likely to be around 5% as against 6.8% the last fiscal. The information came on a day when there were other developments relating to a nod for running private trains, disinvestment of the national carrier Air India and call for a nationwide strike by trade unions to protest against the economic policies in which farmers and students were to join hands. The government is also expected to cut spending as it faces one of the biggest tax shortfalls, with the sluggishness attributed to lack of private investment. The paradox is hard to miss. Is it the economy under the veneer of politics fuelling the unrest or political developments, per se, wrapped in the foil of economy? The data released by the National Statistical Office revealed a considerably lower figure than the 7 per cent projected in July by the Economic Survey. Investments have contracted significantly as a component of the economy and we now have the worst rate of investments since 2005.

The country doesn’t seem to have recovered from the convulsions caused by demonetisation and GST; and it has found the recovery to be halting. Measures to rid the nation of its pet peeves have resulted in confusion and turmoil, a putdown for private investment that looks for stability and assured returns. Days back, Finance Minister Nirmala Sitharaman unveiled a project to give infrastructure a push even as the proposal for privatisation indicates a desire to reduce the role of the government in running business. That the RBI Governor has changed twice since the NDA came to power is an indication of the state of governance.

Prime Minister Narendra Modi spoke to President Donald Trump after the recent US military action against Iran. He may as well have recalled Franklin D Roosevelt and his three ‘Rs’ after the Great Depression—Recovery of economy; Relief for unemployed; Reform of the financial system. The government should use its mandate to win the confidence of the investors and the people alike.