THE SLIDE HAS SLOWED, BUT HASN’T STOPPED
For at least three years now, things that should be rising, such as income, investment and sentiments, have been falling. And things that should be falling, such as inflation, interest rates and deficits, are rising. This double whammy of unwanted rise and undesirable fall has left many of us dizzy.
Dizzy enough to confuse slowing of the speed of fall with a halt.
A series of recent economic data, like stemming the free fall of rupee, the improving current account deficit and tapering of runaway inflation, may suggest that an economic upturn is finally around the corner. Having checked for all the vital symptoms of the economy, we have to disappoint you by pronouncing that a recovery is nowhere in sight.
A bad economy has turned less bad, but it hasn’t turned better. Not as yet. Not till the end of 2013-14. And after that too, the prospects and strength of recovery will depend on whether the new government that is formed by the middle of 2014 is able to steer the economy that has long been left to drift.
Not a single quarter of this financial year will see a GDP growth of 5 per cent, and the full year growth rate will be lower than the already low growth of 4.9 per cent in 2012-13. Since inflation rate is downwardly sticky, interest rates won’t fall either—in fact we predict rates will rise further this year. None of the recent reforms has revived investments, which means job creation will remain muted.
Food inflation will continue to haunt, with vegetable prices soaring by 30 per cent in 2013-14 over 2012-13. This will bring down real income of all salary earners. Tax revenues will be off target by at least 5 per cent, forcing the government to cut capital spending.
In the graphics that follow, we take you through all the vital signs of the economy. Check them out to know what’s in store for both our household and national economy.