MODI'S TWIN CHALLENGES

AT HOME, THE PM HAS TO COME UP WITH BOLD REFORMS TO REV UP A SLOWING ECONOMY AND ENSURE EQUITABLE GROWTH. ABROAD, MODI HAS TO FIND A WAY TO STRIKE A DEAL WITH TRUMP ON HIS TARIFFS AND MIGRATION GROUSES AGAINST INDIA

- RAJ CHENGAPPA

As the new year dawns, Prime Minister Narendra Modi will have to face two challenges with great skill, speed and nerve. The first is on home ground, with the Indian economy yet again buffeted by powerful headwinds. The H1 figures for FY25 show a perturbing slowdown in GDP growth, the Q2 number dropping to a sevenquarter low of 5.4 per cent. Already, rating agencies have shaved off an average of 0.5 percentage points from their earlier optimism of around 7 per cent growth for FY25. India will still be the world's fastest growing major economy, but with a worrying duality.

While one half of its citizenry seems to be doing well economically, the other half is lagging miserably behind.

Sector after sector bears out this dichotomy of a K-shaped economic growth. Take passenger traffic in railways, the prime mode of transport for the poor and lower middle class. It has come down from a pre-COVID peak of 8.4 billion in FY19 to 6.8 billion in FY24, indicating decreasing mobility. Similarly, two-wheeler sales have dropped from a high of 21.2 million in FY19 to 17.9 million in FY24. The low sentiment extends to sales of fastmoving consumer goods (FMCG), particularly in urban areas, failing to perk up even in the festive season. The disparities are showing in the real estate market too, where the sales of new houses priced above Rs 1 crore are proceeding briskly while the demand for affordable houses priced at Rs 50 lakh and below is seeing a slump. All of this is being attributed to rising real estate costs, food inflation and slower wage growth for the middle class.