Vectoring The 3Fs Is Crucial

FARM DISTRESS RESOLUTION, FACILITATING JOBS AND FOCUS ON FISCAL PRUDENCE SHOULD BE THE GOVERNMENT’S PRIORITIES.

- Dharmakirti Joshi

It would be fair to call the just-concluded 2018 a year of recovery as the economy rebounded from demonetisation and glitches in the levy of Goods and Services Tax (GST). A moderate pick-up in growth and low inflation despite spiralling crude prices also helped. But inflation was low mainly due to weak food prices, which meant farmers were – and are – in pain. Plus, the country did not escape the global tailspin in equities. The selloff in emerging market bonds also hurt currencies of countries with current account deficits and India was no exception.

So where do we go from here? Given that the external environment will remain stormy, with the US interest rates higher and protectionist winds still threatening growth and trade, India will have to lean on domestic factors in fiscals 2019 and 2020, and perhaps beyond that.

Essentially, the new year will be about staying on the curve, which will require fixing domestic priorities and doggedly pursuing them even as new global challenges loom. That is why the policy stance of the government becomes all-important this year. Of course, monetary and fiscal stimuli or farm loan waivers can push the growth cycle, but they do little to lift the growth potential of the economy or the trend rate of growth. The government, therefore, needs to focus on what can be called the ‘three Fs’.

F1: Farm Distress Resolution