India's factory output climbed 22.4 per cent in March, benefiting from the base effect of the lockdown-marred month a year back as well as a turnaround in the manufacturing sector, while retail inflation slipped to a three-month low of 4.29 per cent in April. The high positive annual growth in the index of industrial production (IIP) in March 2021 came on back of a contraction of (-)0.9 per cent and (-)3.4 per cent in January and February 2021 respectively, according to the data released by the National Statistical Office (NSO) on Wednesday. This turnaround was led by recovery in the mining, manufacturing and electricity sectors.
The NCEAR has indicated some improvement in the fourth quarter of the current financial year.
India's economy grew by 1.6 per cent in the fourth quarter of 2020-21, restricting the full-year contraction to 7.3 per cent, official data showed on Monday. The fourth quarter growth was better than the 0.5 per cent expansion in the previous October-December quarter of 2020-21. The gross domestic product (GDP) had expanded by 3 per cent in the corresponding January-March period of 2019-20, according to data released by the National Statistical Office (NSO).
India's likely medium-term potential growth will almost certainly be markedly lower than that experienced in pre-pandemic years, warns Shankar Acharya, former chief economic advisor to the Government of India.
However, the government has enacted an important change to the fixed-term employment framework that may help companies in handing out contractual jobs to its existing permanent workforce.
Experts warn of over-interpreting the numbers and said their sustainability needed to be watched beyond November, says Indivjal Dhasmana.
'This encourages escapism through the politics and economics of nationalism, made worse by tribalism or nativism, the package accompanied inevitably by the erosion of institutional bulwarks and therefore State capture by powerful businessmen,' notes T N Ninan.
The Seventh Pay Commission had decided to choose the CPI-IW as the index for adjusting inflation for central government employees.
Declining vegetable prices brought down the retail inflation to a 15-month low of 4.59 per cent in December and within the comfort zone of the Reserve Bank, government data showed on Tuesday. It is for the first time during the current fiscal that the Consumer Price Index (CPI) based inflation print is below 6 per cent or in the RBI's target range of 2 to 6 per cent. The central bank factors in the CPI-based inflation while arriving at its monetary policy. The inflation in December 2020 came down from 6.93 per cent in November, mainly on account of 10.41 per cent decline in vegetable prices over the year-ago period.
Softening inflation, Das said would make available more policy space to the central bank to address risks to the growth going forward.
After contracting for two quarters in a row, the Indian economy entered the positive territory with a growth of 0.4 per cent in the October-December quarter, mainly due to good performance by farm, services and construction sectors, official data showed on Friday. Trade and hotel industry registered a contraction of 7.7 per cent during the third quarter this fiscal, as the sectors continued to suffer on account of coronavirus pandemic. According to the data released by the National Statistical Office (NSO), the farm sector recorded a growth of 3.9 per cent, and the manufacturing sector output grew by 1.6 per cent in the quarter under review.
India's economy recovered faster than expected in the September quarter as a pick-up in manufacturing helped GDP clock a lower contraction of 7.5 per cent and held out hopes for further improvement on better consumer demand. The gross domestic product (GDP) had contracted by a record 23.9 per cent in the first quarter of the 2020-21 fiscal (April 2020 to March 2021) as the coronavirus lockdown pummelled economic activity.
India's GDP is estimated to contract by a record 7.7 per cent during 2020-21 as the COVID-19 pandemic severely hit the key manufacturing and services segments, as per government projections released on Thursday. Amid overall decline in economic activities, some respite was provided by the agriculture sector and utility services like power and gas supply, which have been projected to post positive growth during the current fiscal ending March 2021.
Risk aversion is currently a dominant depressant to economic recovery, points out Shankar Acharya, former chief economic advisor to the Government of India.
During the six-month period (April-September 2019), the Indian economy grew 4.8 per cent as against 7.5 per cent in the same period a year ago.
If the government cuts wasteful expenditure as it is trying now, the deficit would at most fall to 8 per cent, not less than that.
RBI Governor Shaktikanta Das on Friday said that inflation is on a declining trajectory, as it has fallen by 170 basis points from its January 2020 peak. Retail inflation fell to four-month low of 5.91 per cent in March over the previous month, mainly due to easing food prices.
Beside manufacturing, deceleration was also witnessed in sectors like agriculture, construction and electricity, gas and water supply.
Going forward, the February factory output may be impacted as several industries such as automobiles, technology, pharma and fashion have some exposure to imports of raw and intermediate materials from China.
If Nirmala Sitharaman does indeed present a 'never-before' like Budget on February 1, going by her promise, she would create a new benchmark for post-contraction Budgets, observes A K Bhattacharya.
One in five students drop out from school.
'Without reviving employment, consumer confidence will not go up.'
The Bill states a worker will be paid twice his or her wage if he or she is allowed to work overtime. A majority of workers in India worked more than 48 hours in a week, which is higher than the International Labour Organisation's prescribed time-limit.
If imputed inflation for April and May is used, then you have inflation of over 6 per cent for two consecutive quarters, which is a worrying signal for the RBI.
'In 2016, we had De-Mon and in 2017, we had GST.' 'The combined impact of these two started showing up in 2019 and 2020.' 'COVID-19 only added insult to injury.'
The government's decision to release the reports comes two days after over 200 scholars from across the globe issued a statement demanding release of all withheld reports produced by the NSO, including the household consumer expenditure survey that was junked.
The findings of the report showed consumer spending falling for the first time in over four decades in 2017-18. The government has, however, termed it a "draft" report, reports Somesh Jha.
Most of the economic activity in the country had come to a standstill after the government imposed a 21-day nationwide lockdown beginning March 25 to check the spread of coronavirus.
Clearly, the extra borrowing of Rs 4.2 trillion the government has planned so far will not be enough to meet the shortfall in revenues which could be between Rs 8 trillion and Rs 10 trillion, points out A K Bhattacharya.
Only 48.3 per cent of the rural households used LPG, while the figures were much higher in urban areas at 86.6 per cent, according to a NSO report.
Experts said a dip in consumption expenditure indicated an increasing prevalence of poverty in the country.
Concerned by GDP slowdown and unrealistic tax targets, the economists urged Finance Minister Nirmala Sitharaman to implement long-term structural steps like land and labour reforms. Warning against any off-Budget financing the economists said the government should prepare a statement of intent for its social, rural and welfare sector expenditure.
NSO has pegged economic growth at 5 per cent in 2019-20 in its second advance estimates.
'The current economic contraction is certainly due to the lockdowns as a response to the pandemic, which is an act of God.' 'Nobody has seen such a thing in the last 100 years.' 'Saying that this was an act of mismanagement is largely incorrect'
Millions of Indian children lack access to online education as they do not have smartphones, computers or an Internet connection.
Around 81 per cent of the workers constitute the unorganised sector - devoid of any social security cover and outside the purview of a complex set of labour laws.
'While the poor have little say in shaping India's intellectual or public discourse, they do have a significant role in deciding political outcomes,' points out Roshan Kishore.
While it took the Congress nearly a half century to earn the hatred of other political outfits, the BJP appears set to reach there in around six years, says Arun Bhatnagar, former secretary to the GoI.
After assuming power in 2014 with a full majority of its own, the BJP-led NDA government started an ambitious process of reforming labour laws in the form of codes aimed at making the framework less cumbersome with a variety of alterations. It had planned four codes each for industrial relations, wages, social security and welfare, and occupational safety, health and working conditions. To this end, 35 central labour laws were to be converted into four codes that would have had the virtue of streamlining labour relations. But none of the proposed code Bills could be converted into a law principally because neither trade unions nor industry representatives came on board. They hold the key to India's low-growth-high unemployment paradigm but the government may struggle to push them through this time as well. Somesh Jha explains why
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