Talks of immortality but the government seems to be resigned to the low economic figures

- It is in the hands of the government to deal with the domestic challenges that hinder development

- Opinion - P. Chidambaram

- The government's talk of double-digit growth before Corona is no longer seen

Contrary to the Modi government's norm, the country's chief economic advisor has projected the country's economic growth rate to be 6.50 percent per annum for the rest of the current decade. Mr. V. Ananth Nageswaran is a simple person. Ever since he was appointed as the country's chief economic adviser, he has made occasional statements. In a recent statement in Kochi, he said,

"Despite global challenges and uncertainties, India will be able to achieve an economic growth rate of 6.50 per cent per annum in the remaining years of the current decade. Growth in digital economy and increase in investments will also provide additional support to the economic growth rate of the country. ''

Not only is the talk of double-digit growth by the government before Corona, not only is it not seen now, the government cannot repeat the golden period of development that was seen in the period of 2004 to 2010. At the end of the financial year 2022-23, the gross domestic product (GDP) of the country is expected to be 3.75 billion dollars. If the economic growth rate of the country will be 6.50 percent per annum, the target of making the economy five billion dollars, which has been pushed back from the year 2023-24 to 2025-26, will now be further pushed back to the year 2027-28.

Who is responsible?

Both domestic and external factors are responsible for the slow growth of the economic growth rate. We cannot control external factors but only fight against them. For example, the Russia-Ukraine war and the deliberate reduction of oil production by crude oil producing countries are beyond our control. If this war continues and crude oil prices continue to rise, the government cannot be blamed for its adverse effects.

Domestic factors on the other hand are the responsibility of the government. Government needs to be resilient and able to manage these factors. Due to demonetisation in November, 2016, the growth slowed down. The growth rate was slow in the financial years 2017-18, 2018-19 and 2019-20. Then there was the corona epidemic. Prolonged lockdowns, laxity in launching free vaccination programmes, inadequate financial support to MSMEs and the government's reluctance to transfer cash to the very poor have exacerbated the situation. Thousands of industrial units were shut down and hundreds of jobs were lost forever. The government continued to take supply-side measures but refrained from taking measures to increase demand.

poor recovery

Total consumption expenditure increased by only 6.30 percent. While GFCE grew by 1.30 percent of GDP. The economic growth rate which was 9.10 percent in the financial year 2021-22 has come down to 7.20 percent in the financial year 2022-23. India's growth is driven by consumption rather than capital expenditure. Weaker growth in consumption indicates that people have less money on hand to spend. Either higher prices or lower optimism about the future or all of these factors may be responsible for the sluggish growth in consumption.

Looking at economic activity, growth in other sectors excluding agriculture and financial and professional services was lower in FY 2022-23 as compared to FY 2021-22. In mining and covering there was a growth of 4.60 percent against 7.10 percent. The growth rate of manufacturing sector which was 11.10 percent in financial year 2021-22 was 1.30 percent in 2022-23. In the construction sector, this rate was 10 percent against 14.80 percent. All these three sectors are labour-oriented sectors.

Retail inflation eased to 4.30 per cent in April, but we are not out of trouble yet. Reserve Bank has assumed that the process of reducing inflation will be slow and long. Keeping in mind the huge increase in the workforce every year, managers cannot remain oblivious to the development context, said Reserve Bank Governor Shaktikanta Das. According to CMIE data, India's unemployment rate was 8.11 percent in April, while the labor participation rate was 42 percent. Satisfied in 6-5-8

There was a time when the country's policy makers were content with five percent growth rate and five percent inflation. This left millions of people in the country poor and India fell behind its neighbor China and other South-East Asian countries. I am concerned that this is happening again. Current policymakers talk of an elixir, but seem to be settling for an economic growth rate of 6 percent, an inflation rate of five percent, and an unemployment rate of eight percent. These figures portend disaster for India. This disaster means widespread poverty, unemployment and a sharp rise in inequality. India may not become a middle income country for many years.

We had to prepare our target anew. Achieving a rapid growth rate of 8-9 percent and going into double digits is expected, but for the current policy makers and rulers, this target seems beyond their reach.

- Poor recovery after Corona, look at various statistics

Rupees in crores

2021-22 2022-23 Growth Rate

Private final consumption expenditure 87,03,540 93,58,695 7.50

Government final consumption expenditure 15,75,280 15,75,306 zero

Gross Fixed Capital Expenditure 48,78,774 54,34,692

Percentage of GDP 32.68 33.95