The nation has moved on from demonetisation but the GST system needs a serious rethink, specially about the higher slabs.
A dip in car and two-wheeler sales, skidding to their lowest in about seven years, is symptomatic of a larger economic downturn. While India's highly evolved auto industry may drive out of tough times quickly as demand rises, what the drop represents is a dip in general consumption that should worry economists. Irrespective of the arguments over the data collection methodology over jobs and broader indicators on the economy, the fact is that the new government has its task cut out in reviving consumer demand and driving economic growth, that dipped in the year's first quarter to below seven per cent, close to China's growth. The fall in industrial production in March and the offtake in services, as indicated by reliable figures regularly gathered, suggest that the problem of lower growth could be around for a while.
The nation has moved on from demonetisation but the GST system needs a serious rethink, specially about the higher slabs. Infusion of cheaper credit for the NBFC sector to disseminate is a major call that can't be shied away from just because of the IL&FS mess. The headwinds are strong - as in rural distress, unemployment and dipping exports. The days of low petroleum prices that enabled the NDA government in its early days to control the fiscal deficit may have disappeared for a while at least, with the West Asia crisis surrounding Iran not helping either. What seems clear is that consumer confidence and spending is vital to the largely-domestic consumer-driven economy, which contributes around 60 per cent to GDP. The challenges are huge, and fresh thinking is vitally needed.