The Indian economy is blaring warnings, but the Modi government remains in denial -Jayati Ghosh
While the government was busy celebrating cosmetic measures like ‘ease of doing business’ ranking, the real economy tanked.
Suddenly, it seems like everything is shrinking in India: our capacity for tolerance and diversity, the space for democratic expression and dissent – and now, economic growth.
The warning signs have reached a point where they cannot be ignored any longer and more people, including prominent business leaders, are speaking out. Yet, at least overtly, the government is in denial, claiming that this serious slowdown is at most a “correction,” resulting from “an excess of reforms,” all of which will make everything better very soon.
Writing on the wall
The economic data coming out now are stark. There is negative growth in the core industrial sector as passenger vehicle sales, tractor sales, two-wheeler sales and domestic air traffic growth have all been declining for around six months.
Other consumer durables, like white goods, also show a hit in sales. Sales of fast-moving consumer goods, normally the last to react, are slowing down.
Capacity utilisation in all manufacturing segments is apparently below 70% on average, even as inventories pile up, rail freight traffic is now below the past five years’ average and the real estate sector is stuck with over seven years’ stock of unsold buildings.
All this comes even as the credibility of India’s official GDP data is being questioned, as it does not appear to capture the material realities faced by millions of producers, employers and workers.
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