The last few weeks for the NDA government have been harrowing with criticism being voiced in various quarters about the faulty implementation of demonetisation which was intrinsically a well-intentioned move and Goods and Services Tax (GST) which too has been a victim of glitches. The economy in general has shown infirmities with weak numbers adding to a mood of despondency. The National Executive meeting organised by the BJP in New Delhi on Sunday and Monday was intended to revive the mood and to find some palliatives.
Whether this was mere tokenism or it made meaningful course corrections only time will tell. Of concern were some negative indicators– the expansion in gross domestic product slowed to a multi-year low of 5.7 per cent in the first quarter of 2017-18, industrial output growth dropped to 1.2 per cent in July, compared to 4.5 per cent a year earlier. In addition, retail price inflation jumped to a five-month high of 3.36 per cent in August from 2.36 per cent in the previous month. The economy has been decelerating for the last five quarters, much of it to the ill-effects of demonetisation and to the poor implementation of GST. The lack of private investment contributed to the overall slowdown, necessitating greater spend by the government to stimulate economic activity.
In that light, the blueprint for ‘energy for all’ unveiled by Prime Minister Narendra Modi in New Delhi on Monday with provision for electrifying 18,000 new villages with a 75 per cent central subsidy should contribute to kick-starting the economy by stimulating demand in the rural sector. With Modi’s extended honeymoon with the electorate virtually at an end, this scheme and others that may follow to reinvigorate the economy and win back voters will be watched with keen interest.
The government indeed would be on test as never before and apart from the much-needed stimulus, there is deep concern on the job front too with unemployment on the rise. The various rigidities in the market for land and labour have been holding back the economy for decades now, stopping investors from risking their capital on large-scale projects needed to boost growth. This would need a special watch. The welcome though belated move by the Prime Minister to set up an economic advisory council to advise him on economic issues should also help. All in all, the Modi government has woken up to the gathering clouds and may well be able to recover lost ground.
