Prime Minister Narendra Modi has jetted off to the city of the Eiffel Tower to help solve the problems of the world. Meanwhile, the towering economic problems within the country are crying for his attention. Growth has slowed down to 6.8 per cent, the slowest in five years, with the government showing no signs of stopping the slide. The captains of industry have been desperately seeking some stimulus to give a fillip to growth, particularly to private investment. The Reserve Bank of India (RBI) did its part by lowering interest rates recently and has been nudging banks to pass on the rate cut benefits to industry.
However, long term fiscal and administrative measures like facilitating the ease of doing business, labour and land reforms and tackling rural distress need to be addressed through well-thought-out measures. Former RBI governor Raghuram Rajan has flagged the need to immediately tackle the problems of the power and non-banking finance companies (NBFCs), the latter being the backbone of medium and small industries.
Meanwhile, the country is staring at layoffs and huge unemployment with companies like Parle and Maruti being the latest to announce massive layoffs of their workforce. Even the fashionistas are curbing their seasonal needs, resulting in fashion stores seeing a 3-9 per cent lower growth.
Union finance minister Nirmala Sitharaman is showing no signs of rectifying the body blow she dealt to wealth creators like the super-rich in her maiden Budget. The foreign portfolio investors (FPIs) who were included in the super-rich category have already withdrawn $1.8 billion from the stockmarket after a surcharge was imposed on their income. There is fading hope that Ms Sithraman will woo them back.