IMF Cuts India’s Growth Forecast
Confirming the bursting of India’s growth story, the International Monetary Fund cut India’s growth forecast from 7.2% to 6.7%. In not so many words, the IMF laid the blame squarely on the “disruptions” caused by demonetisation, and erratic implementation of GST. The report by IMF, titled The World Economic Outlook, also distressingly lowered India’s growth forecast for 2018-19 by 30 basis points. It also raised the growth forecast for the Chinese economy to 6.8%, putting the nation ahead of India.
A recent article by CMIE also reveals that the urban unemployment rate has risen to 8.2%. This rate has been the highest in the past 11 months. It is to be noted that this number only reflects unemployment in the urban and organized sector. Who knows what is the state of the untold unemployed people living in rural areas, or working in the unorganised sector? The government’s efforts to help the unemployed have also only bared limited fruit. Data for the PMKVY scheme until the first week of July 2017 reveals that out of a total 30.67 lakh candidates who had been trained or were undergoing training across the country, less than a tenth — 2.9 lakh candidates — had received placement offers. RTI reports suggest that the NSDC has been able to identify only 5% candidate who got placement after being trained under PMKVY.
Just a cursory glance over the numbers will send shivers down any onlooker’s spine. Apart from the unemployment rate, private investment is evaporating. Government projects are getting stalled, delaying much needed infrastructure. The nerve-centre of the economy, the banking industry is reeling under monumental debts of bad loans. It is hence refusing to extend lines of credit to capital heavy industries like Steel that need to come out of a rut. The government kicked the economy in the gut when it was down literally by instituting demonetisation. Its uncoordinated implementation of GST added fuel to the fire. To top it all, the BJP government has acquired worldwide notoriety for falsifying government data.
The BJP needs to pull up its socks and tackle the problems facing the economy. With oil prices rising and the IMF revising China’s growth rate upwards, the window of opportunity is rapidly closing.