oppn parties Where Is The Economy Headed?

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  • For the first time ever, Mukesh Ambani buys a 29% stake in Gautam Adani's Mahan Energen, a subsidiary of Adani Power to source 500MW of electricity from the company's power plant in MP
  • Stocks continue to rise on Thursday - Sensex gains 639 points to 73635 and Nifty 203 points to 22326
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  • AAP's Jalandhar-West MP Sushil Kumar Rinku joins the BJP. He was the only AAP Lok Sabha MP
  • Supreme Court dismisses Centre's plea to review its 2023 verdict in the PMLA case
  • Close save for passengers as they remain unhurt after the wings of two planes graze at Kolkata airport. Pilots derostered and inquiry ordered by DGCA
  • Bengal BJP leader Dilip Ghosh gets notice from the EC as well as the BJP for making ugly remarks about Mamata Banerjee's parentage
  • Sadanand Vasanth Date, who faught terrorists in the 26/11 attack and was awarded the Preisent's Police medal, has been appointed the head of the NIA
  • Centre will borrow Rs 7.5L cr in the first six months of FY25, nearly 50% of the target for the full year
  • 25 stocks, including SBI, will see same day trade settlements from today in the world's fastest settlement mode in both BSE and NSE
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  • Tennis: Rohan Bopanna-Matthew Ebden reached the semifinals of the Miami Open
Delhi Lt Governor Vinai Kumar Saxena says government cannot be run from jail, hints at President's Rule in the capital ////// In a dangerous incident, the wings of two planes grazed while taxiing on the runway at Kolkata airport, all passengers were safe but DGCA ordered an inquiry and the pilots were derostered
oppn parties
Where Is The Economy Headed?

By Ashwini Agarwal
First publised on 2018-06-18 08:41:09

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.