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Infra development, clearing backlog of defence purchases to be priorities for future: Arun Jaitley

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New Delhi | Finance Minister Arun Jaitley said on Friday the government’s priority for the future would be infrastructure development and clearing backlog of defence procurement, among others.

Development of rural India and improvement of healthcare and education would be the other priority areas, he said at the Hindu Business Line award function here.

“In future maybe four priorities– rural India, backlog of defence procurement, healthcare and education and of course infrastructure,” he said.

“I foresee a better quality of life in urban slums, rural India and the policies must be aimed at allowing these people to aspire and get into at least neo middle class. Two areas where we seriously need to concentrate is healthcare and education,” he said.

There are some areas which are growing and some require support from the government for improving capacity like rural sector, he said, adding higher resources would help the government to spend more on infrastructure development.

The effort of the government has been to maximise resources with lowering of the tax rate by following the theory of lower taxation higher compliance, he said.

In the last five years, there has not been a single incidence of increase in tax rate and rates in both direct and indirect taxes have been lowered, he said.

Talking about Ayushman Bharat programme, he said 16 lakh people have benefited from this cashless insurance scheme of the government in the first four months of its launch.

With this scheme suddenly 78 per cent of the population came under the health insurance cover, he said.

The ambitious scheme launched in September 2018 aims at providing coverage of Rs 5 lakh per family annually, benefiting more than 10 crore poor families.

Eligible people can avail the benefits in the government and listed private hospitals.

The scheme targets poor deprived rural families and identified occupational category of urban workers’ families, 8.03 crore in rural and 2.33 crore in urban areas, as per the latest Socio-Economic Caste Census (SECC) data. It has provided cover of around 50 crore people.

Indian Economy

The jobless have no Achhe Din

Akhilesh Bhargava

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India needs a million new jobs per month, to provide gainful livelihood and employment to the graduating adults. But these new jobs are not being created in enough numbers. The government denies it and wants us to believe otherwise, with the support of statistics from the NSSO, Niti Aayog and the EPFO, all of which tend to be taken with a ton of salt. These positive and bright employment figures put up by the government agencies, get countered by the likes of the CMIE, which instead of challenging the figures related to jobs, shockingly says that there are 8 million less jobs today, than there were in December 2016, when demonetisation was enforced, thus contending that the number of jobs have shrunk instead of going up. The job and unemployment scene in India, is not so bad as the CMIE says, and is neither so good as say some government influenced economists, who say that 6.2 million new jobs were created in 2017/18 and 5.2 million in 2016/17.

 

The ground reality is that not enough jobs as promised have been created during the past five years and that the lack of jobs, which is unemployment, as well as under employment is a huge social, economic and political problem, with more and more youth entering the Indian job market each month. It is this lack of promised jobs, that will challenge whether achhe din finally came or not, in the ensuing elections, and also stands testimony to the fact that the flagship reform programs of the government viz. Make In India, Skill India and Smart City India, have not been a success by this measure. While a weak and disunited Opposition seems to be unable to get this lack of jobs as the main issue on the centre stage of the current elections, but yet this undercurrent of unemployment will swing votes away from the BJP. A family with jobless adults is bound to be disenchanted with the ruling party, and is bound to vote for alternates.

 

The signs of unemployment and its reasons are many. The very fact that household savings are falling, consumer spending has receded and lakhs of applications are received for an ordinary job, mean that jobs are not there, as much as are needed. The unwillingness of the private sector to invest in new projects, falling corporate profits, several big companies like RCom, Jet Airways, Zee etc. being in a problem and the banking crisis remaining unresolved, only mean that the corporate sector has not generated new jobs worth talking. The rural distress and the suffering SME sector too means that these segments of our economy, which are huge generators of jobs, are not doing so. If companies are unwilling to put capital into new projects and the likes of the auto sector are cutting back production, it only raises a question mark on the employment claims, and supports the fact has not enough new jobs are being created. Other symptoms that are of concern are that India’s GDP growth per quarter has been receding, industrial production grew at its lowest in January in the past 15 months, and India’s manufacturing exports have not been able to take off in a big way, such as to generate enough new jobs.

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Indian Economy

The slowdown in our economy

Akhilesh Bhargava

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The warning of many economists that the Indian economy is slowing down may not suit the BJP in an election year, but the signs of a sharp slowdown in our economic growth abound. The Indian GDP grew at a mere 6.6% in the December quarter, its slowest in five quarters and that continues. The CSO has thus reduced its annual growth estimate of our GDP in FY 2019, to just about 7%. The slowing economic growth is clearly reflected in the sharp fall in consumer demand, leading to a cut of 26.8% in vehicle production by Maruti Udyog in March 2019. All other auto companies face a similar situation. This cut in production comes after three years of double-digit growth clocked by Maruti Udyog. It has been due to declining urban sales and slowing rural demand. A slowdown in consumer spending, which accounts for 60% of our economy is worrisome, due to its ripple effect across many other sectors of the economy like engineering, textiles, manufacturing etc. This deceleration in consumer spending is further reflected in the fall in our non-gold imports, for a second consecutive month.

There are many other signs of a downturn in the Indian economy. Industrial growth receded to 1.6% in January, as against 2.6% in December 2018, exports grew by 2.4% in February, as against 3.7% in January and GST collections fail to meet their target, month after month. Despite the heavy-handed income tax collection/coercive recovery measures unleashed by the Income Tax Department, the government faces a likely shortfall of Rs.50000 crores in its targeted income tax collection and that too, after withholding tax refunds of over Rs. 1.50 lac crores. The SME sector continues to suffer and so does the core sector growth, with the Reserve Bank reporting that new investments in the economy contracted for a seventh successive year. While the unwillingness of the private sector to pump in investments into new projects is a matter of serious concern, so are the challenges in a build-up of employment, which ultimately reflects in the reduced consumer spending, for want of household income. In the meanwhile, the litany of populist election sops have failed to alleviate India’s rural distress.

While there is no doubt that the global economy has been witnessing a continued slowdown, but yet India, with its huge domestic market of crores of young consumers should be relatively immune to it. The present downturn in the Indian economy negates the inherent upsurge in demand due to the unmet consumer aspirations of our millions, which has more to do with government policy errors. If demonetisation hit growth where it hurts the most and sent it into a downward tailspin, from which we are yet to recover, so has been the case with unemployment which remains untamed. Millions of SMEs have closed down due to the impact of demonetisation and heavy handed legislation by an insensitive government, which prefer closure than policy uncertainty. The fact is that the two key sectors of the economy that are job and growth generators viz. SMEs and the farm sector remain in distress with no respite in sight. The unresolved challenges remain on various fronts including unemployment, fresh investments, ease of doing business for SMEs in particular, banking crisis etc. which hold back our growth.

 

The fact is that the growth in our economy in the last few years has been funded and fuelled primarily by government spending, with a private sector unwilling to risk its capital. The government’s reforms and policy have failed to restore confidence, in the minds of the producer, as well as consumer as is indicated by the cutdown in production by Maruti. With the government having emptied its treasury on poll premises, its capacity to spend is eroded and the slowdown will continue in the coming quarters.

 

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Indian Economy

WPI inflation rises to 2.93% in February

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New Delhi | Inflation based on wholesale prices rose to 2.93 per cent in February over the previous month due to hardening of prices of primary articles, fuel and power, according to government data released on Thursday.

The Wholesale Price Index (WPI) based inflation stood at 2.76 per cent in January, 2019.

WPI inflation stood at 2.74 per cent during February 2018.

Inflation of primary articles, which includes kitchen essentials like potato, onion, fruits, and milk increased to 4.84 per cent during the month, as against 3.54 in January, the data revealed.

The WPI data further revealed that wholesale-based price inflation for ‘fuel and power’ segment increased to 2.23 per cent in February as against 1.85 per cent in January 2019.

The Reserve Bank, which mainly factors in retail inflation based Consumer Price Index (CPI), had cut the key lending rate by 0.25 per cent in February.

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