Various estimates appreciates Indian economic growth, but the real performance of the economy is not so optimistic.
Corrective steps are needed to recover momentum in industrial growth
What does recent estimates on economy signifies?
World Bank Group’s Doing Business 2018 report ranked India at 100 out of 190 countries.
The global rating agency Moody has upgraded India’s Sovereign bond rating. Click here to know more
The ratings by Moody’s are based on its assessment of the trajectory of governments’ abilities to service their debt over time.
The higher rating for India signals a lower risk grade for the government’s debt and can lower the cost of raising it.
The improvements reflect the increased attractiveness of India to investors.
What is actual growth scenario?
The Index of Industrial Production (IIP)which represents non-agricultural production, investment and consumption in the economy, for April through September does not present a pretty picture.
Estimates on the industrial output is also bad, the growth rate weakened to 2.5%,which was 5.8% a year ago.
On the manufacturing front, the growth rate was 1.9%, pale when compared to 6.1% a year ago.
In infrastructure and construction the growth rate 2%, is feeble compared to 4.9% in the first half of last year.
Even though the investment climate remains soured, the conditions do not seem conducive for job creation.
The industrial performance this year so far is so tepid that it is weaker than it had been in 2012-13.
Exports are declining, which is sharper in the employment-intensive sectors of leather, gems, jewellery, handicrafts, readymade apparel and carpets.
What are the reasons for the declining trend?
Exporters blame the break in the trend on a liquidity crunch owing to the infirmities in the goods and services tax (GST) system.
And there are also complains that exporter’s refund claims were not released for four months.
Smaller firms with limited access to working capital have taken a body blow.
If demonetisation led to demand destruction, the GST rollout has had disastrous effects on the supply side.
The twin shocks have compounded the problems of industry, big and small, that was already struggling with a slowdown.
