Yashwant Sinha! I assure you GDP growth @ 12%
I foresee, as a professional analyst and a strategist, a clear jump from next consequent quarters all the way through 2020; Indian economy will hit a...
I foresee, as a professional analyst and a strategist, a clear jump from next consequent quarters all the way through 2020; Indian economy will hit a record high of 12% year-on-year GDP growth rate. This isn’t a prophecy, but a thoroughly analysed projection.
Actually, Yashwant Sinha can see this too. However, he wishes to make it a politically convenient negative projection. I can understand his current disposition; it’s also a compulsion of his political situation.
He knows exactly both as a former administrator, Finance Minister and an active politician from a party like BJP, that the only outcome expected of the path-breaking reforms like demonetisation and GST unleashed by the Modi government will be extremely positive. That is why I strongly believe that career administrative officers don’t make great politicians.
Yashwant Sinha’s defence of the UPA government’s economic incompetence and policy paralysis blows the lid over his personal political agenda. His attempt to heap his personal prejudice on PM Modi through the mask of ‘economic analysis’ only highlights the state of mind of a disgruntled politician.
Yashwant Sinha smacks of utter prejudice and lacks objectivity of an analyst. His statements on Indian economy are imaginary, unsubstantiated, ill-intended, politically motivated and wishful. In a rush to politically attack PM Modi, his statements and flawed analysis are doing more damage to his own personal reputation.
First things first, PM Modi and his government have carried out unprecedented, historic and path-breaking reforms through demonetisation and GST in almost successive quarters of a financial year. It is like doing an open heart surgery, immediately over a complex brain surgery, though in different vital parts but both affecting the whole body and especially the neurology of the system.
The likes of Yashwant Sinha want no after affects, can’t take a little slowdown, won’t agree for a reasonable downtime, nor are they sincere to any positive wish that the system will recoup and reignite more efficiently delivering better outcomes. Essentially, that’s not what they wish for. At one extreme for their personal political career, they would want the patient dead, no matter who the patient is.
They throw any commonsense and caution out of the window. As commonsense would let them understand, slowdown is essential for any recovery after a massive shock. No wonder, common sense is uncommon.
The result of the economic slowdown in the last two quarters is not unplanned. Only fools, who make peripheral analysis, wouldn’t predict a serious slowdown after such a massive shock was induced into a financial machine, by overnight taking out 86% of the circulated currency from the system. Another important point to note is, this is no accident. It’s a policy decision by a responsible government to ‘organise the unorganised.’
It is a clear call taken by PM Modi and his government with the authority given to it by the people of this nation, to ensure that this nation walks tall and strong with ethical economic fundamentals. India voted in 2014 for not just clean government but a cleaner economy.
This government has in the process of living up to its promise to the people of this nation, has chosen to accept even economic slowdown for few quarters, rather than live in a false, fabricated, unorganised, unethical, undeclared and black economy.
PM Modi took over from the UPA government in 2014 at 8.3% annual growth rate and brought it up all the way to 9.2% in early 2016. The economic policy competence of this government is established right in the first two years of its operation. I am not even talking in terms of unprecedented positive sentiment in investments and stocks.
It’s clearly established that either this government could walk on the treaded path to claim statistical brownie points through annual growth rates in GDP or disrupt the economy for the larger good of the world’s fastest-growing economy. Courageously, PM Modi & his government chose the latter.
Even if one were to assess the outcomes of the self-inflicted slowdown for a surgical purpose, the Indian economy expanded 5.7 per cent year-on-year in the second quarter of 2017, below 6.1 per cent in the previous period and market expectations of 6.6 per cent. The weaker growth rate is due to a slowdown in consumer spending and exports. On the production side, manufacturing slowed the most.
The lower growth rates were recorded for private spending (6.7 per cent compared to 7.3 per cent in the previous period); government consumption (17.2 per cent compared to 31.9 per cent) and exports (1.2 per cent compared to 10.3 per cent) while imports rose at a faster 13.4 per cent (11.9 per cent). On the other hand, gross fixed capital formation rose 1.6 per cent, following a 2 per cent drop in the first three months of the year.
However, if one were to be as positively wishful as I am, The Gross Value Added, that is, GDP excluding taxes, increased 5.6 per cent year-on-year in Q2 of 2017, the same as in the previous quarter. Though the Mining and quarrying shrank 0.7 per cent (+6.4 percent in the previous quarter) and slowdowns were recorded for manufacturing (1.2 per cent compared to 5.3 per cent), I give a serious applause to lowered public administration spending (not public investments or welfare schemes) and lowered Defence spending (9.5 per cent compared to 17 per cent).
On the other hand, faster increases were recorded for trade, hotels, transport and communication (11.1 per cent compared to 6.5 per cent); financial and real estate activities (6.4 per cent compared to 2.2 per cent) and utilities (7 per cent compared to 6.1 per cent).
The good news in the annual growth rate slowdown, which points at the results of the surgery to the macroeconomic system of India are in the right direction. I analyse from the above limited statistics that the lowering of personal spending by Richie rich is because their spending currently is on a high scrutiny and unaccounted cash inflows have been negatively affected.
Though there is a decrease in volume of business, temporarily, increase in declared sales and trade with GST in place is a major plus. Lowered public administration expenses points to much-required minimum government and maximum governance.
While the slowdown in manufacturing output could be partially due to the GST goods clearance and a wait-and-watch policy by manufacturers, it’s imperative that they have to resume production sooner than later to meet the demand and supply in their markets.
Surge in financial activity, real estate, utilities indicate the health of the other core sectors of the economy is upbeat and it’s just about time before they positively impact the manufacturing & agriculture to reignite this mega economic machine.
Unlike Yashwant Sinha, I am quite excited about the prospects of a new economy ahead. India is moving towards a new and real economy, more organised, more digital, more accounted, more ethical.
While numbers do matter, once in a while a national leader has to make historic choices to keep up promises. PM Narendra Modi has made his choices with a competent team. As the intentions of the decisions are not self-sabotage, not driven out of corruption, not anti-Indian economy and certainly not out of incompetence, the outcomes will have to be certainly great for the nation. What one sows, one reaps.
I clearly foresee surge of the new Indian economy with a year-on-year growth rate of the GDP by 12% by year 2020. The broadening of the macroeconomic base, further rise of services sector, rapid growth of manufacturing sector through geopolitical opportunities in the region, sharp incline in domestic spending, increase in public and private investments, reorganised, expanded and rejuvenated agri sector, robust banking & financial system and efficient government spending will give the Indian economy the catalysis it requires.
PM Narendra Modi and his government will continue in power in the second successful term and be remembered in history not just for attaining this historic growth rate, but more so for their courage and conviction to have positively course corrected this mammoth – ‘The Indian Economy.’ (Writer is BJP Spokesperson/Organisational Strategist & Author)
By Krishna Saagar Rao