Between The Lines

The only way to battle the many causes of the slowdown is an honest reading of economic data

- Soumik Dey

WINTER IS HERE! It may be midsummer out there, but the chill of an economic slowdown has started setting in deep. Many people in the government had seen it coming, but were asked to keep quiet. The price of the silence has now become a heavy burden on the economy.

Despite the Modi government’s official narrative of India being one of the fastest growing economies in the world, the distress signals are showing up across reports. North Block these days receives calls from almost every multilateral agency and foreign fund expressing concerns about India’s growth trajectory.

Railway Minister Piyush Goyal, who held the finance portfolio for a brief period, said no matter what the talk was, India was one of the fastest growing economies. But Goyal’s claim is taken only with a pinch of salt. “Sure, we are one of the fastest growing economies right now, but that is because there is a slowdown in China,” said Madhur Jha, research head of Standard Chartered Bank in India. “The Indian economy has grown faster than this in the past.”

Jha in a recent report said that India’s per person GDP of about $1,970 would become $5,400 by 2030. However, Bangladesh’s per person GDP ($1,600 now) would touch $5,700 by then and Vietnam’s $10,400. China’s per person GDP of $8,807 will continue to grow at 5 per cent or more till 2030.

The concerns over India’s growth engines sputtering were triggered by Asian Development Bank, which has big investments in large infrastructure projects in India. The ADB revised India’s GDP estimate downwards to 7.2 per cent in April, from 7.5 per cent earlier. Subsequently, the Reserve Bank of India dropped its expectations on GDP growth hovering above 7.5 per cent for 2019-20. The World Bank and the IMF had also expressed concerns about India’s GDP growth for the year and pegged it at 7.2 per cent and 7.3 per cent, respectively.