MORE BAD THAN GOOD

THE ROAD AHEAD AP­PEARS QUITE FOGGY.

Business Today - - THE BUZZ - By PROS­EN­JIT DATTA IL­LUS­TRA­TION BY RAJ VERMA @pro­saicview

FOR THE cur­rent NDA govern­ment, the 8.2 per cent GDP growth clocked in the first quar­ter of this fis­cal along with the lower than an­tic­i­pated in­fla­tion should have been a rea­son for com­fort. But over the past few weeks, bad news on the eco­nomic front – both macro and mi­cro – has far out­weighed any good news. Crude oil prices have been ris­ing in­ex­orably and many an­a­lysts ex­pect it to cross $100 a bar­rel. Mean­while, the ru­pee has been plung­ing in value, and it has been the worst per­form­ing cur­rency in Asia since the be­gin­ning of this year, hav­ing dropped be­low ` 74 to a dol­lar at the time of go­ing to press.

If this had helped spur ex­ports, it would have been some con­so­la­tion but ex­ports have been slug­gish while im­ports are grow­ing faster, lead­ing to ris­ing trade and cur­rent ac­count deficits, both mov­ing be­yond com­fort lev­els. The In­fra­struc­ture Leas­ing & Fi­nan­cial Ser­vices (IL&FS) de­fault could not have come at a worse time, since the fi­nan­cial and cor­po­rate sec­tors are al­ready un­der stress be­cause of the twin bal­ance sheet prob­lem. To top it all, the news on the GST col­lec­tions is still not en­cour­ag­ing and un­less things pick up dra­mat­i­cally dur­ing the rest of the year, the govern­ment could well find a rev­enue short­fall star­ing at it. All in all, not a great out­look when it also has to grap­ple with a global trade war and im­pend­ing elec­tions.

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