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Friday, 8 June 2018

The Hindu Editorial: Is The Indian Economy On An Upswing Now?

Mahendra Guru

Title: Is the Indian economy on an upswing now? 

(Many policy initiatives have shown a clear productivity enhancing supply-side thrust) 

Yes:- The Indian economy has shown a strong V-shaped recovery driven largely by domestic growth impulses. Gross Domestic Product (GDP) growth fell quarter after quarter from a peak of 9% to a trough of 5.6% in the first quarter of 2017-18. As is widely recognised, this was due to demonetisation and the transitory adverse effects of the goods and services tax implementation. 
These eventually subsided and for the last three quarters, growth steadily recovered to 6.3%, 7.0% and 7.7% in the second, third and fourth quarters of 2017-18, respectively. 
From the demand side, two segments which have supported growth, particularly in the fourth quarter of 2017-18, are government consumption and overall investment demand. 
The real investment rate has also increased to 34.6% in the fourth quarter of 2017-18 

Productivity focus 
Key policy initiatives (Make in India, Start-up India) also aim at improving productivity. 
The power sector further benefitted from the Ujwal DISCOM Assurance Yojana scheme. For real estate and banking, the regulatory framework was changed. 

NO:- While growth estimates may point to an upswing, the euphoria may be premature. 
GDP growth estimates released by the Central Statistics Office (CSO) suggest that the economy grew at 6.7% in 2017-18 at 2011-12 prices. This, incidentally, is the lowest growth rate during this government’s four years in power. GDP growth rate has decelerated sharply from the high of 8.2% in 2015-16, the first full year since the government assumed office. 

Agricultural growth in real terms at 4.5% appears more of a statistical artefact than a story of turnaround in agriculture. Growth in nominal GDP in agriculture at 4.91% also happens to be the lowest growth in the fourth quarter since 2012-13. It is lower than the nominal growth of agricultural GDP in the fourth quarter achieved during the two drought years (2014 and 2015). 

But herein lies the problem of the Indian economy. It is going through a period when domestic demand especially in the rural areas has almost collapsed. 

There has growing farmer unrest in the rural areas against falling commodity prices. The strike in many agriculturally important States is a clear reflection of the level of distress. 
While rural demand remains subdued, export demand has also plummeted with the export-GDP ratio reaching its lowest in a decade. With private investment and consumer demand sluggish, the only thing that is working for the economy is lower inflation. 

Latest estimates may suggest that the worst may be over for the economy as far as the two shocks of demonetisation and the GST are concerned, but it is certainly too early to celebrate the revival of economic growth. 

Complicated:- A V-shaped recovery depends on export growth and also on private investment picking up. 

It is fairly well known that the quarterly estimates by the CSO for GDP growth are always based on projections, so they are not regarded as reliable. Equally important, in a highly informalised economy, where the share of the unregistered economy is not very well known, all estimates of GDP growth, especially projections, are likely to be an issue. 
The external environment is not exactly buoyant. Global growth had been slow till 2017, when it improved in the U.S., Europe, China and Japan. 

But the most recent downside, which will have widespread consequences in India, is that oil prices, after being low for at least four years, have begun rising again. Second, the international trade environment, favourable until recently, has worsened with threats of a U.S.-China trade war. 

Third, interest rates have begun to rise in the U.S., and will continue to rise, reducing the prospect of more fund flow to emerging economies, including India. 

Exports value fell sharply to levels well below the value of $315 billion in 2013-14, were $275 billion in 2016-17, and have only recently risen to $303 billion in 2017-18. 

The main good news in recent times on revenue has been the 53% rise in the number of tax payers under the GST, and increased formalisation of the economy bringing more entities in the tax net. 

The implication is that the inflation rate, which has remained low in recent years, is likely to rise. In any case, given that the path of fiscal consolidation cannot be abandoned for fear, inter-alia(among other things), of losing credibility with international rating agencies, the potential for India spending its way out into a high growth path quickly remains limited. 

Title: Sustaining earth for the future 

(India is in need of a massive new effort to catalogue, map and monitor all life forms) 

Context:- Life is a unique asset of our planet. India is blessed with an extraordinary richness of life. This unique bio-cultural tapestry has been resilient to change for centuries, but with the unleashing of unprecedented economic and environmental forces, it is now subject to increasing wear and tear. 

Ultimately, these forces could even destroy our tapestry of life, cultures and traditions — and in the process, ourselves. 

Biologists all over the world have been documenting the ongoing loss of life forms. Modern extinction rates are more than a thousand times greater than the rates of the geological past. In recent decades, populations of more than 40% of large mammals have declined and insect biomass has decreased by more than 75%. Natural habitats all over the world have shrunk. For these losses, our country ranks higher than most. 

We have entered what scientists are calling the Anthropocene era — a new period in earth’s history, when humans have begun to impact our environment at the global scale. 
We constantly talk about cleaning up the Ganga, as if it were the sole festering wound, but we overlook that the whole tapestry covering our body is slowly disintegrating. All life requires nurturing. 

Taking stock 
To protect life on earth, the famous American biologist E.O. Wilson has described an ambitious project he calls “Half-Earth”. He calls for formally protecting 50% of the earth’s land surface in order to conserve our rapidly disappearing natural heritage. 

Clearly, we must do more to safeguard biodiversity and the ecosystem services that support all human endeavours. 

India’s forest policy calls for forests to cover almost a third of the country, and if we include other natural systems such as grasslands and wetlands, the area to be protected could amount to almost 40%. 

We need a massive new effort to catalogue, map, and monitor life, using fundamentally different approaches. 

Cataloguing, mapping and monitoring life will give us a glimpse of what we have, and what is most vulnerable. But how do we reconcile the growing needs of society with the need to sustain our vanishing natural heritage? 

Fortunately, some in the Indian science establishment, such as the Departments of Biotechnology and of Science and Technology, have recently started programmes and initiatives in the broader areas of science and society. 
The India Biodiversity Portal has the ambitious goal of mapping India’s biodiversity with the engagement of civil society though the portal relies largely on private support. 

Vocabulary words: 

Catalogue (verb) = Classify, categorize (तालिका) 

Myriad (noun) = A countless or extremely great number of people or things (असंख्य) 

Exquisite (adj) = Beautiful, lovely 

Tapestry (noun) = Used in reference to an intricate or complex sequence of events 

Resilient (adj) = Strong, flexible (लचीला) 

Festering wound = If a wound festers, it becomes infected, making it worse 

Reconcile (verb) = Restore friendly relations between (समाधान करना) 

Inextricably (adv) = In a way that is impossible to separate 

Transitory (adj) = Not permanent, temporary (अस्थायी) 

Paradoxically (adv) = Self-contradictory way (विडंबना, विरोधाभास से) 

Euphoria (noun) = Happiness, delight 

Decisively (adv) = In a way that shows the ability to make decisions effectively (दृढ़ता से) 

Impartially (adv) = In a way that treats all rivals or disputants equally (निष्पक्ष) 

Spurt (noun) = Bounce (उछाल) 

Racial (adj) = Ethnic (जातीय) 

Prevailing (adj) = Existing at a particular time (प्रचलित) 

Precarious (adj) = Uncertain (अनिश्चित) 

Plummet (verb) = Fall or drop straight down at high speed 

Buoyant (adj) = Cheerful and optimistic 

Bolster (verb) = Support, strengthen

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