Could the single engine driving India crash? Yes, if you go by one of Modi's top guys

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published Published on May 13, 2019   modified Modified on May 13, 2019
-The Economic Times

At a time when the shadow of a slowdown lengthens but the government steadfastly downplays any such concern, here comes a cracker of an observation from one of India's most celebrated economists who also happens to be a vital cog in Modi's policy team.

In an interview to NDTV, Rathin Roy, member of the Prime Minister's Economic Advisory Council (PMEAC) and Director of National Institute of Public Finance & Policy, said that India could be headed towards a structural crisis.

In view of the coming crisis, India could soon get ensnared in the middle-income trap, eventually becoming like Brazil or South Africa, the top economist warned.

"In the history of the world, countries have avoided the middle income trap, but no country — once caught in it — has ever been able to get out," he said.

The shadow of a slowdown

An ET Intelligence Group survey had found a few days ago that India's consumption story was seriously misfiring — with many sectors like auto, FMCG and air travel, among others, wallowing in multi-quarter lows.

Decreasing money supply, rising uncertainty, and a plunge in income growth in both rural and urban India were forcing people to cut down on spending, the study had discovered.

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The Economic Times, 9 May, 2019,

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