Hard Times

There is no denying the fact of the slowdown. And it will take bold interventions—both structural and short term—to pull the economy out of this deep rut.

- M.G. Arun & Shwweta Punj

WE HAVE made a start. Even diehard optimists, till recently in denial of the sobering reality of an economic slowdown, have seen it writ large in the latest GDP numbers. The government has also swung into action, and is busily announcing sops and quickfixes to get the economy going again. Has it done enough? Not if you ask Maitreesh Ghatak, economist and professor at the London School of Economics. “It’s like re-arranging the deck-chairs on the Titanic,” he says, talking about the bits-and-pieces moves to revive some sectors. Many will disagree with Ghatak’s dire reading of the government’s early moves towards a solution, but there is a wide and growing consensus that we are in the midst of a dangerously protracted slowdown. Not all is lost, though. There are tough decisions to be taken and difficult changes to be implemented in the weeks and months ahead, but first, the government needs to see the problem for what it is. And what better than the latest GDP number to wake it from its slumber?

On August 30, at Finance Minister Nirmala Sitharaman’s press meet—where she announced the mega merger of state-owned banks, saying it would increase access to loans and boost demand—came the real bad news. India’s GDP growth fell to 5 per cent in the AprilJune quarter of the current fiscal, down from 8 per cent a year ago. Worse, manufacturing grew by just 0.6 per cent in the same quarter, crashing from 3 per cent in the preceding three months. These figures made plain the severe distress the economy has been going through.