Faultlines In The Economy

Part of Modi’s original agenda is in need of a serious boost. How will he revisit it?

- Lola Nayar and Jyotika Sood

AS India prepares for the second innings of the Modi government, the economic scenario in the country is not too upbeat despite expec tations of over seven per cent GDP growth in 2019-20. Though the BJP led government has so far not admitted to a slowdown in growth or voiced concerns over clear signs of dip in consumer spending, economists are not shying away from recognising the challenges ahead for the new government.

“There is lot of smoke around the growth nar­ rative. If you look beyond just the GDP numbers at high frequency indica­ tors, then all of them: exports, savings, inv e s­ tment, freight traffic, electricity consumption, etc., have been trending down for a while. There might be a spurt one quarter due to a low base, but trends are markedly lower than in the earlier period in 2013­14. Lately, even consumer senti­ ments seem to be dipping as consumption levels in several seg­ ments have fallen substantially,” states Alok Sheel, professor, RBI chair, Indian Council for Research on International Economic Relations.

Experts say these challenges can be overcome. Some of them are old legacy handed over to the Modi government, while a few are outcomes of the mess created due to policy decisions like dem onetisation and GST. Both these policy decisions continue to have far reaching impact on crucial sectors like agriculture and MSMEs, both of which are major employment generators.