Unless India Inc, and public sector units, which are reportedly sitting on `64,000 crores of cash, begin to invest more, there can be no growth
The downward revision of growth estimates to five per cent by the Central Statistics Organisation for 2012-13 needs to be taken very seriously. It is not an issue of GDP being 5 or 5.5 or 5.3; these are issues of fractions. The more disturbing fact is the persistent and stubborn slowdown in the economy.
Even if one takes growth from November onwards, when the government started initiating reforms, it will be just another slightly higher fraction and will not take away from the main problem facing the Indian economy.
The most disturbing scenario is in the manufacturing sector, which grew at 1.9 per cent, the lowest in 14 years. Manufacturing is a major employment generator and, translated at the ground level, this means a drastic fall in employment and employment opportunities. Even services, which accounted for 60 per cent of GDP, has slowed down to 6.6 per cent from 8.2 per cent.
The story in the agricultural sector is equally dismal with growth of 1.8 per cent against 3.6 per cent the previous year. While the kharif crop suffered due to inadequate rains, the rabi crop, which looked promising due to good winter rains, is now being threatened by excessive rain which is said to be destroying the standing winter crops. In this age of technological advancement it is futile to blame only the weather because there is enough technology available from our south-eastern neighbours to handle crops in drought-like conditions. Gujarat chief minister Narendra Modi is said to have introduced some of this technology in his state.
Union finance minister P. Chidambaram has been doing his best to cut the fiscal deficit and get investment going, but the other ministries are letting him down. There is still no resolution of the coal and gas shortages affecting power and fertiliser plants. This week the 1,940-MW Ratnagiri Gas and Power Pvt. Ltd has been virtually crippled due to gas shortage and there is no urgency in handling it. This sense of urgency is also sorely lacking in the implementation of the National Manufacturing Policy and in the Cabinet Committee on Investments.
The economy seems to be trapped in a chakravyuh because unless India Inc, and the PSUs, which are reportedly sitting on `64,000 crores of cash, start investing, there can be no growth. No one is making fresh investments because of delay in approvals, procedural bottlenecks and lack of governance.
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