Bikky Khosla | 21 May, 2019
With completion of 2019 Lok Sabha elections on Sunday, one of the
bitterly fought election battles in recent memory has officially come to an
end. An estimated 900 million citizens cast their votes in thousands of
polling booths in every corner of the country, and now what remains is the
final vote-counting. Political observers are not fully in agreement on who will
come to power, but there is a near-unanimous view among economy watchers that
the new government will face a tough
task of bringing the economy back on track.
Most of the recent vital macro-economic data sets suggest that the economy
is not in good health. It grew 6.6 percent in the December quarter, the slowest
in five quarters, which prompted the CSO to trim its 2018-19 GDP forecast to 7
percent. More recently, multiple agencies have lowered India's GDP
growth forecast for 2019-20, with ADB cutting it to 7.2 percent from 7.6
percent, RBI to 7.2 percent from 7.4 percent and then IMF to 7.3 percent.
Several macro indicators show that this growth concern is not baseless.
Slowdown
in auto sales is one of major indicators that reflects a lacklustre picture of the Indian economy. According to experts,
this slowdown may have a cascading impact on some major job creating industries
like steel in coming days. While auto sales is being dragged by low demand from
rural areas, the farm sector is echoing similar concern, with fall in crop
prices recently leading agitated farmers across the country to vent their anger
on streets. We are also staring at one of the worst job crisis ever.
Without an iota of doubt, much of the ongoing slowdown can be
attributed to disruptions arising from the elections, but this does not change
the fact that the economy is not in good shape and it is in dire need
of a booster dose for its revival. Slowing growth, low private investment, slacking
consumption, farm distress, dull exports, unemployment, global
headwinds and stagnant wages are some of the major challenges that the new
government will have to address to bring the economy back to the growth path.
I invite your opinions.
