The quarterly economic growth number is no doubt one of the most watched economic measures for assessing the country’s growth chart. It is one of the earliest yardsticks to gauge the effectiveness of the various policies implemented by the Govt and it was a clear signal for the Modi Government when the numbers were announced last evening.
The Government is walking a tightrope on the economic front and there is no room for complacency going forward. Though growth in the first quarter continues to tread above the psychological 7% mark it is significantly lower than what was recorded in the same period last year at 7.1% Vs 7.4%. You could argue that whatever it is India is set to overtake China in its quarterly growth progress but my concern is growth has declined significantly in most categories compared what they clocked same time last year. The only exception is hotel transport, trade and communication.
Agriculture perhaps indicates some sunshine despite the shortfall in rains. It recorded a positive quarter after two consecutive quarters of decline. The core sector data is also insipid and failed to lift the spirit. The need to revive both demand as well as investment is written in bold and the Modi Government has no time to lose if they intend to even honour 50% of their election claims.
Agriculture especially needs some dedicated and continuous attention. In a country that still draws a primary chunk of its growth data from farming, we can’t be so dependent on rains. There is urgent need to tap water sources and disburse it effectively throughout the country. Increasing productivity and addressing irrigation issues take pole position.
The next course of action will be bringing forth agricultural reforms, reviving demand and better equipping the investment areas. Infact in this consumer demand has seen a significant development and recorded a higher tick in this quarter on a year on year basis.
The fiscal deficit numbers probably brought some cheer and assurance on the Govt’s policy implementation. The quality of spending has improved, the share of capital expenditure is rising and is set to kindle core sector growth. However there is need to take cohesive steps to address all of these in one go and time is premium currently for the Modi Government.