Tuesday, September 26, 2017

Commentary: the Indian economy in a hole

It is not very often that the expert economists and the layman agree so nearly on the state of the economy we seem to do today in India. The only difference is the laity is bewildered by the irrationality of the demonetization and the GST measures and is left wondering if they are missing something. The trained economist may be in a better position to get over the prolonged harassment caused by these two measures and assure us coolly that something is indeed very wrong. If the government’s solution to what may become a snowballing crisis is full rural electrification by the end of 2018 by way of incentive, the decision makers are clearly quite clueless on the policy front. According to this article, there isn’t really much the government can do except some tinkering and adding to the pile of promises already made in rapid succession.

It is now very likely that soon history will look at the two milestone measures of this government as self-inflicted injuries of the worst kind, imposed as they were when the economy was already in a vulnerable state. We have no clear idea who the economic advisors behind these moves were although some neo-liberal economists continue to assure us that things are not that bad and that India will eventually pull out of the mess. This is a bit like appreciating the Mumbai citizen’s resilience during the heavy floods without doing anything about this annual routine.

The implications of such economic forecast are gruesome since the economists quoted do not even take agricultural sector into account where again matters are not in a good shape. It is likely that like Sikar in Rajasthan, we may see more agitations and unrest in the coming years as various socio-economic segments take to the streets either in convergence or separately.

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