Buoyant again: on India’s GDP growth: THE HINDU EDITORIAL

Buoyant again: on India’s GDP growth: THE HINDU EDITORIAL

Buoyant again on India’s GDP growth THE HINDU EDITORIAL

The latest economic data from the Central Statistics Office reveal that India’s GDP expanded at a brisk 7.2% pace in the three months ended December, an acceleration from the 6.5% posted in the second quarter. On the face of it, the numbers are cause for cheer and optimism, with gross fixed capital formation, a key measure of investment demand, showing a healthy improvement. Sectoral gross value added (GVA) figures also reflect a broad-based pickup in activity from the preceding quarter. The only three laggards last quarter were mining; utility services (including electricity, gas, and water supply); and trade, hotels, transport and communication services. The contraction in mining is of particular concern. 
The October-December quarter in 2016 was, however, the period when the Centre implemented the widely disruptive demonetisation of high-value currency notes, and so one has to bear in mind the base effect on the latest third-quarter data. Also, the CSO’s second advance estimates of national income for the full financial year are a lot more sobering. Both GDP and GVA growth estimates for 2017-18 have been revised upwards from the first-cut projections made in early January — GDP growth to 6.6% from 6.5% earlier as a result of GVA expansion being lifted to 6.4% from January’s 6.1%. But the assumption for increase in net taxes has been pared, reflecting the struggle to ensure buoyancy in GST revenue collections. A study of the full-year projections reveals the pressure points. The same sectoral GVA data that at a quarterly level appeared to give promise of a more enduring recovery show momentum in five of the eight sectors decelerating. Of particular concern are the farm sector, where growth is set to slow to 3% from 6.3% in the previous fiscal; and manufacturing where the pace is expected to ease to 5.1% from 7.9% in the revised estimate for 2016-17. 
The latest Index of Industrial Production numbers that show manufacturing in April-December still significantly lagging behind the previous nine-month period, as also the Nikkei India Manufacturing Purchasing Manager’s Index that shows growth in the sector slowed to a four-month low in February, add to concerns about manufacturing. With private final consumption expenditure, a crucial driver of economic momentum, still to gain traction over the full financial year, it is increased government spending that has undergirded the expansion. Here lies the rub. The leeway for more pump priming is restricted as fiscal deficit at the end of January has already exceeded 113% of the revised estimate for the full year. Any more profligacy by the government risks threatening price stability. With the banking sector beset by bad loans and increased scrutiny on lending in the wake of frauds, and exporters still to make the most of the revival in global trade demand, the economy is not yet out of the woods.


1) Brisk
Meaning: Showing a wish to deal with things quickly; slightly brusque.
Example: “she adopted a brisk, businesslike tone”
Synonyms: Decisive, Abrupt
2) Pickup
Meaning: An improvement, especially in an economy.
Example: “a pickup in demand”
Synonyms: Improvement, Recovery
Antonyms: Slump, Downturn
3) Laggards
Meaning: A person who makes slow progress and falls behind others.
Example: “Staffs were under enormous pressure and there was no time for laggards”
Synonyms: Sluggard, Slug
4) Disruptive
Meaning: Causing or tending to cause disruption.
Example: “disruptive pupils”
Synonyms: Troublesome, Unruly
Antonyms: Well behaved, Manageable
5) Sobering
Meaning: Make or become more serious, sensible, and solemn.
Example: “his expression sobered her”
Synonyms: Relax, Steady
6) Buoyancy
Meaning: A high level of activity in an economy or stock market.
Example: “there is renewed buoyancy in the demand for steel”
Synonyms: Vigour, Strength
Antonyms: Depression
7) Enduring
Meaning: Lasting over a period of time; durable.
Example: “he formed a number of enduring relationships with women”
8) Decelerating
Meaning: Reduce or cause to reduce in speed.
Example: “the train began to decelerate”
Synonyms: Brake, Slow
Antonyms: Accelerate
9) Undergirded
Meaning: Provide support or a firm basis for.
Example: “that’s a philosophy that needs to undergird retailers’ business plans this year”
10) Rub
Meaning: The central problem or difficulty in a situation.
Example: “that was the rub—she had not cared enough”
Synonyms: Problem, Difficulty
11) Leeway
Meaning: The amount of freedom to move or act that is available.
Example: “the government had greater leeway to introduce reforms”
Synonyms: Freedom, Scope
Antonyms: Constraint, Restriction
12) Profligacy
Meaning: Reckless extravagance or wastefulness in the use of resources.
Example: “the government returned to fiscal profligacy
Example: “the security forces are a bulwark against the breakdown of society”
Synonyms: Protector, Protection
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