There’s no respite from the flurry of bad news on the economy. With GDP growth dipping to five per cent, the lowest in six years, and the alarming fall in figures from eight core sectors, including coal, crude oil, steel, cement and electricity, are the figures showing a fall in services sector activity in August, compared to July’s peak. These wake-up calls have been strident, and the government cannot be even in partial denial. There was some action towards addressing this issue, and a slew of announcements made on easing the pain caused by unwise Budget proposals like a tax on FPIs and the super-rich, which may help a bit. The easing of curbs on single-brand retail FDI might lead to new jobs in Apple, Foxconn and Ikea.
A wholehearted acceptance that huge problems have emerged in corporates, MSMEs and agricultural India may lead to smoothening of the recovery path. This is a contraction in the consumption-led slowdown, like a quasi-recession, and any talk of the “world’s fastest growing economy” can only be delusional. The argument that there is a global slowdown, accelerated by the US-China trade war, doesn’t help; in fact India will also suffer as a result. Stock market slides are symptomatic of the disease, and the latest one since the Budget is a clear signal that things aren’t going right. Very bold structural reforms are called for, including a radical relook at the unconscionable GST rates. Successive repo rate revisions this year have done little to stimulate the economy, and the 3.3 per cent fiscal deficit target isn’t a “lakshman rekha”. If it has to go for the revival of growth and consumer confidence, so be it. As Bill Clinton once famously told Americans — “It’s the economy, stupid”!