GROWTH ESTIMATES A LIMITED RECOVERY

There’s indeed light at the end of the tunnel. After a succession of increase in price of crude oil in the international market, and consequently of petrol and diesel in India, there is a minor decrease internationally even as the Modi government braces itself for measures to contain the surge. At the same time, this country’s GDP has risen to a seven-quarter high of 7.7 per cent in JanuaryMarch, 2018 following a good Rabi harvest and an upturn in the manufacturing and construction sectors. The provisional estimates of GDP, released by Central Statistics Office (CSO), show that while the overall growth rate for the full year (2017-18) was estimated at 6.7 per cent, it would be the lowest in four years of NDA rule. This is apparently the effect of the introduction of GST (Goods and Services Tax) which was projected to slow down the economy, and, on recovery, lead to a steady increase. The growth rate of GDP was 7.1 per cent in 2016-17 and is expected to be bettered to 7.5 per cent in the current year. According to provisional estimates for Gross Value Added, it was 6.5 per cent in 201718, down from 7.1 per cent in the previous financial year and the lowest in five years.

Significantly, stock markets shrugged off the dismal showing of the BJP in the assembly and Lok Sabha bypolls with the benchmark BSE Sensex surging 416 points on the last day of May. The rally was led by financial, information technology and energy stocks, and was fuelled by the hope of good GDP growth numbers for the fourth quarter of 2018 that were borne out when the numbers finally came. There was, however, a dampener in figures cited by a World Bank report that revealed that about 20 million women disappeared from India’s workforce between 2004 and 2012. The massive scale of attrition in the country’s female workforce can spell trouble for the government’s grand plan to invite employment by appealing to both local and foreign companies. This point can be illustrated by McKinsey Global Institute’s assertion that India has the ability to increase its GDP by $770 billion in the next seven years simply by encouraging more and more women to work in the skilled labour sector.