India is better off than other major economies where the slowdown and economic woes are much more. However, this does not give us solace as the Indian economy to is slowing down though not as rapid and drastic as other major economies. The future is bright but there are major economic woes that need immediate fixing that too through big-ticket structural reforms. Immediate short-term prospects of the economy are not as bright as are made out to be as there are cracks in macro-economic fundamentals which were otherwise strong for quite a while now. Ever since demonetisation in 2016, India’s growth story had taken a hit with the economy slowing down quarter after quarter, and during Covid pandemic, it took a further hit as all the economies in the world, slipped into negative territory. This year the economic recovery was quite rapid unlike other major economies earning kudos from IMF and World Bank. But structural weaknesses have come to the fore making the picture gloomy in the short term. In the long-term, India could become a USD 25 trillion economy when it completes 100 years of independence in 2047, but all economic indicators paint a gloomy picture in the next few years. The problems are many.
To begin with, the immediate problems are jobless growth, inflation, sliding rupee, depleting foreign exchange reserves, widening current account deficit, slowing exports growth, poor infrastructure, tardy and delayed implementation of projects, poor health of power companies and bad state of affairs of public enterprises. There are too many problems on the plate and these needed to be fixed to get back to a high growth path on a sustained basis. India is needed to have high growth every year in the next couple of decades to ensure that poverty is eradicated and most of the working-age population is gainfully employed. With the majority of the 1.3 billion population being youth, it is necessary that India achieved real growth of 6.5 to 7 percent annually, which meant that GDP growth would have to be at least 8-9 percent annually.
Another positive development, according to CMIE is that consumer sentiments are at a 30-month high as it vaulted by an impressive 7 percent in September. Households expressed a greater propensity to spend and also were quite gung-ho about their future well-being. Both the index of current economic conditions and the index of consumer expectations increased handsomely during the month. Vyas said this is promising as India has changed track in recent months. Yet another good news is private sector investment. Indian private corporate sector has increased its interest in setting up new production capacities. New private corporate investment announcements have risen to INR 4.6 trillion in 2022. But public enterprise investments are not that encouraging. This meant the Industrial outlook is not firing on all cylinders. There are some positives in an overall gloomy economic scenario. There are some signs of recovery but there is a long way to go. Continued efforts to push structural reforms are the key that India returning to a high growth path when the world economy recovered from the recessionary, inflationary, and difficult geo-political scenario. India is certainly a bright spot. But if the global recession persists longer than expected and the geo-political scenario worsens in months to come instead of improving India’s economy apple cart could face problems. So there is a need to keep our fingers crossed.
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