oppn parties Where Is The Economy Headed?

News Snippets

  • S Jaishankar, Minister of External Affairs, says Pakistan should release and repatriate Kulbhushan Jadhav immediately
  • Karnataka Governor Vajubhai Vala asks the Speaker to hold the trust vote latest by 1.30 pm today
  • The Government sends a list of 24 questions to mobile app company that runs video app TikTok seeking answers for anti-national and obscene content carried on the platform
  • Sarvana Bhawan founder P Rajagopal, serving a life term for murder, dies in a Chennai hospital
  • SC allows time till July 31 to the Ayodhya mediation panel
  • IT department attaches "benami" plot worth Rs 400cr in Noida. The plot allegedly belongs to BSP leader [email protected]@@s brother and his wife
  • Dawood [email protected]@@s nephew, Md. Rizwan Iqbal, was arrested from Mumbai airport as he was waiting to board a flight to Dubai
  • Trouble brews in Bihar JD(U)-BJP alliance as Bihar police asks special branch officers to keep tabs on RSS activities
  • Trust vote in Karnataka assembly today. With rebel MLAs deciding to stay away after the SC order, the Congress-JD(S) government is likely to fall as it does not have the numbers
  • Amit Shah says the government will identify and deport illegal immigrants from all parts of the country
  • Reports from Pakistan confirm that Hafiz Saeed has been arrested and sent to jail
  • After the SC order, Karnataka Speaker says he will go by the Constitution in deciding on the resignations of the 16 MLAs
  • Rebel MLAs say they will not attend the trust vote on Thursday
  • Supreme Court rules that rebel MLAs cannot be forced to attend the assembly and vote in the floor test
  • Both the Centre and the Assam government have sought re-verification of up to 20% of draft NRC data
International Court of Justice agrees with India, stays Kulbhushan Jadhav's execution. It asks Pakistan to allow consular access to the accused.
oppn parties
Where Is The Economy Headed?

By Ashwini Agarwal

The economy is showing signs of revival and it is reflected in the industrial production figures that grew 4.9 percent in April after reaching a five-month low in March. This means that demand for goods and services is rising and that it out hope for creation of jobs, one thing that the present government has not managed to bring on track. But this good news is also tempered by extremely low or negative growth in sectors like agriculture, fishing and mining. While mining is suffering from the effects of large scale corruption in licensing and the resultant court cases, if agriculture – the sector that provides jobs to nearly half of the workforce – does not take off and if farm distress continues, jobs created in factories or the service sector will not be enough as a large number of people will be rendered unemployed from agriculture. The only ray of hope is that the Met has predicted a normal-to-good monsoon and it might help in reviving the sector and lessening farm distress.

On the other hand, hardening of oil and commodity prices have meant that the consumer price index (CPI) is rising faster than expected. As producers battle with rising input costs, they are unable to absorb it in the face of thin margins and product prices are increasing across the board. Couple this with rising prices of daily essentials and farm produce such as vegetables and fruits and the problem being faced by households is clear. In fact, most households surveyed by the RBI expect the CPI to rise faster in the coming months and reach its peak during the festival season in September-October.

The government has to work fast in introducing further reforms. It also has to step up investments in the renewable energy sector so that reliance on fossil fuels is decreased. If inflation rises beyond a comfortable level, the RBI will have to follow a tight money policy to suck out excess cash from the economy. Prices are not likely to fall soon because even if the monsoon is good and the farms produce more, the effects will show only during September-October. By that time, the festival season will push up demand to bring us back to square one.