The NDA government led by Narendra Modi, and his confidant Arun Jaitley as its Finance Minister is about to present their last full budget on the 1st of February, 2018. The Economic Survey was put before the house today, which gathered the attention of economists and business leaders.
The carefully worded and detailed document comes in the backdrop of Demonetisation and GST implementation which have put the Indian market on a snail’s pace growth.
Despite the fanfare around the Indian economy being branded as the world’s fastest growing economy and Arun Jaitley selling the economy as one with strong macroeconomic credentials, the picture presented by the Government today is not very optimistic for many aam aadmis like us.
The economic survey projects that the Indian economy will grow at a pace of 6.7 to 7 % by the second or third quarter this year. There has been much of reliance on the IMF analysis of Indian economy and there has been a lot of talk about the need to balance the twin balance sheets after GST implementation.
The economic survey also shows that the economy will bounce to growth trajectory and the GST transition will usher in a better economic ecosystem in India with technically progressive and tax compliant regime.
Though the macroeconomic credentials are being lauded for being beyond the levels of expectation, the microeconomic credentials have not been discussed.
The bank recapitalisation exercise has been lauded as it is a move that will keep the banks in a condition to lend and afford their expenses, while the private banks will be given a push.
Also, the government aims to bag a good amount of capital by disinvesting its stake in government corporations.
The most peculiar feature of the survey remained pivotal to the cost of crude oil which has been low, all these years, while their forecast puts it to bounce this year, and will mean that our pockets will be hit directly as well as indirectly.
The survey also talked of the tanking foreign investments and direct investments that are set to grow. This means jobs for us all, while we lease out our economic system to foreign capitalists (ironic).
The expectations from the survey are based on the explanation afforded by the finance minister before the Diwali, last year, where they harped that the economic credentials on a macro scale are strong.
Unfortunately the reality has been a little different from the Lutyen’s theory that the economic survey preaches. The middle level business community is being hit with the foreign capital backed retailers taking the business to the next level. The job creation in the formal and informal sector has been abysmally low, which one may argue, is the outcome of lack of black money, though in reality it is the outcome of lack of purchasing power that all the people had.
Due to rigours of taxation and accounting, the businesses have suffered snarls and the people who lost their livelihood post demonetisation are also facing a crunch. Due to lack of circulation of currency, as still 3-4% currency has not been pumped in, the small scale and middle level entrepreneurs are unable to bear the operating costs and due to lack of enough business, there is a lack of lending and unemployment.
The government is also not focusing on the consumer price index to map the actual inflation figures, which is adding to the woes of the common man. This crony capitalism is new to the Indian economy, and there is no job formalisation or job creation to be seen yet, while many businesses have shut their operations, rendering many jobless.
Are we opening our economy for the foreign capitalist to make our country a slave yet again?