The continuing downturn in economy, reflected in a number of parameters and data pouring in from various agencies, is a cause of serious concern and government must pay immediate attention to this serious issue.
The slowdown in the economy that began about five years ago after the demonetisation and the roll out of GST, has shown no signs of abatement and some of the recent statistics are a pointer to a possible worsening situation in the offing.
While it is true that there is a little slowdown in economy almost everywhere in the world, India as a growing economy is perhaps the worst hit. Besides the global factors, it is the local factors and policies that have added to the poor economic conditions in the country.
Indian-American Abhijit Banerjee (in pic
), who recently won a Nobel prize in economics, last week underlined that the Indian economy was on a ‘shaky grounds’. He referred to the figures put out by the National Sample Survey organisation, which is a government agency and reports on average consumptions in urban and rural areas of the country. Its latest report had admitted that the consumption levels had gone down between 2014-15 and 2017-18.
He said consumption levels are indicators of a growing economy and prosperity of any country. It is perhaps for the first time that the levels have gone down and has cautioned that it was a glaring warning sign.
The same report, prepared by union ministry of statistics and programme implementation, had pointed out that the country’s unemployment rate had hit a 45 year high of 5.1 per cent in 2017-18.
It also said that the unemployment was higher in urban areas at 7.8 per cent as compared to 5.3 per cent in rural areas of the country. Another significant pointer was that the unemployment rate among the young had reached a record high.
One should study these figures with the data on MANREGA release recently. Here the worrying parameter was that more and more rural youth are enrolling for the scheme. The share of workforce comprising young workers in the age group of 18 to 30 years, which was 58.69 lakh in 2017-18 has gone up to 70.71 lakh in 2018-19 and is sharply increasing. This indicates that youth are not finding jobs and are forced to get employment through the scheme which was aimed to benefit the poorest of the poor.
Automobiles industry is the largest private sector employer and generator of revenue. The sharp decline in the the sales of motor vehicles, including cars, two wheelers and trucks, indicates an overall slowdown of the economy. The drop in sales over the last one year has led major manufacturers to cut production, and has put pressure on the overall automotive sector, including the automobile ancillaries which manufacture various parts of vehicles.
The sale of vehicles this year is recorded the worst in the last 19 years, according to data released by the Society of Indian Automobile Manufacturers. Nearly 500 dealership outlets across the country have shut down and at least 30,000 job losses have been estimated so far.
Even the festival season this year has not brought good news for the automobile sector.
The loss of jobs in the automobile sector has added to the jobs lost in the wake of demonetisation and the roll out of the Goods and Services Tax. Thousands of small and medium industries continue to remain closed or have slashed production.
A number of factors ail the automobile sector including less money in the market, reluctance of banks to give loans, apprehensions about new norms on emissions being introduced and reduction of period for road worthiness of vehicles.
Other parameters of India’s economy are also not too bright. India has slipped one notch in the World Bank’s Gross Domestic Product (GDP) rankings in 2018, and is now the seventh-largest economy with the United Kingdom and France ahead of India. We were ahead of France till last year.
The country’s growth rate is also declining since it reached 7.9 per cent in the first quarter of 2018. As per revised estimates it is now between 5 and 6 per cent. The stock markets are also not doing too well while the rupee exchange rate is steadily declining.
It is well known that poor employment and production rate or a downturn in economy can lead to serious social and law and order situation. It can give rise to mass protests and sharp increase in the incidents of thefts, burglaries and much serious crimes. At least four countries are currently witnessing serious protests and violence emanating from economic problems. These are Chile, Equador, Lebnon and Iraq.
The focus during the lok sabha elections earlier this year and to the Maharashtra and Haryana assembly elections has been on issues other than the state of economy. The government has taken a few piece meal steps but these are clearly not enough. It is high time the Modi government now turns its focus on the economic front.
(The author, a freelance journalist, is a former Resident Editor of Indian Express, Chandigarh, and reported on the political developments in Jammu and Kashmir, North-Eastern India, Gujarat, Himachal Pradesh, Haryana and Punjab in his long, illustrious career.)
Manmohan vs Modi: Analysis of Economic Policies
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