New economic data to help govt fight rivals better
After few months of economic gloom there is some good news for the Prime Minister Narendra Modi-led government. If economic data was denting the government's image and critics were having a field day, the latest data release brings cheer to the government.
- Oct 15, 2017,
- Updated Oct 15, 2017 1:05 PM IST
After few months of economic gloom there is some good news for the Prime Minister Narendra Modi-led government. If economic data was denting the government's image and critics were having a field day, the latest data release brings cheer to the government.
India's annual consumer inflation last month had climbed to 3.4 percent and coupled with high fuel prices it was arming the government's political opponents.
Post GST implementation despite the supply demand equation and seasonal reasons, the inflation mark in September eased though marginally to 3.28 per cent compared to last year. The expectation was for a climb to 3.5 per cent.
In Washington for the IMF and World Bank annual meetings, Secretary, Department of Economic Affairs, Subhash Garg told India Today, "The upward climb in inflation was due to several reasons including seasonal. Things have started easing."
The government expects reduction in inflation to continue. Recently to curb the spiralling prices of petrol and diesel the govt announced a Rs 2 cut in excise levied on fuels. States like Maharastra and Gujarat responded by slashing VAT levied on the two commodities. Since the cuts were not part of the last economic data cycle, government hopes there might be further reduction in inflation figures as fuels drive prices in the economy.
But that is not all. The steady decline in industrial output in the last few quarters and exports were impacting growth figures and the govt was facing hostile fire from friends and foes, including senior bjp leader and ex-Finance Minister Yashwant Sinha, after GDP growth was revised downward by RBI, the World Bank and the IMF. The government was visibly on the back foot as the data couldn't be denied.
Yashwant Sinha launched a frontal attack claiming things were so bad that he "had to speak up" against the government. The BJP's internal assessment too indicated that the fallout of note ban and GST launch was hurting the government's image. Amidst the rising negative chorus PM Modi stepped in and announced that the government was ready to ease the hardships faced especially my small businesses due to the GST launch.
The 4.3 per cent rise in index of industrial production (IIP) in August, indicates not only a turnaround from the contraction in June but also a faster growth percentage recorded in July at 0.9 per cent.
At Washington where finance minister is actively trying to bring greater investment and correct the recently impacted image these are welcome changes after a slump to a 36 month low in the June quarter. Even the industrial growth is up at around 2.5 per cent.
Secretary Economic Affairs MR Garg said "This is what we had expected. Due to GST launch from July 1 certain things happened. There was higher stock clearance but not production as recalibration for the new tax regime was on. We expect things will get better."
Speaking exclusively to India Today he said, "We expected the situation to turn. But we didn't expect it to turn so quickly. And we are confident that the improvement is here to stay."
In fact MR Garg felt confident that since all these indicators feed the GDP the next round of GDP data release may also depict an improvement after a steady decline for several quarters
The other positive news is on India's trade deficit front which narrowed to a lowest mark in seven months at $8.98 billion in September.
Post GST exporters were feeling the pinch due to delay in payments reducing their working capital. In its last meeting the GST governing council decided to resolve the issue by easing the situation by depositing nominal amounts for exporters which can be adjusted agains their eventual dues. The proposal for a e-wallet too with a similar concept was cleared as a long term solution.
The government is watching the situation closely and is still not calling it a complete recovery. But sources say the 25.67 per cent rise in merchandise exports in September, way beyond the 18.1 per cent increase in imports is a positive development
Mr Garg said, "The government has been responsive to the challenges. Several measures initiated in the recent past will bring more dividend. Plus the government is giving a huge infrastructure expenditure push which will create a more conducive path for a better growth trajectory."
The government feels that the positive movements on all these parameters will eventually improve the ecosystem, thus creating a more fertile ground for job generation which is proving to be a politico-economic Waterloo for the govt These numbers do not say that the economy has emerged completely out of the pit as the data needs to remain consistently good for several more quarters, but the current numbers will weaken the political campaign against the Modi government.
After few months of economic gloom there is some good news for the Prime Minister Narendra Modi-led government. If economic data was denting the government's image and critics were having a field day, the latest data release brings cheer to the government.
India's annual consumer inflation last month had climbed to 3.4 percent and coupled with high fuel prices it was arming the government's political opponents.
Post GST implementation despite the supply demand equation and seasonal reasons, the inflation mark in September eased though marginally to 3.28 per cent compared to last year. The expectation was for a climb to 3.5 per cent.
In Washington for the IMF and World Bank annual meetings, Secretary, Department of Economic Affairs, Subhash Garg told India Today, "The upward climb in inflation was due to several reasons including seasonal. Things have started easing."
The government expects reduction in inflation to continue. Recently to curb the spiralling prices of petrol and diesel the govt announced a Rs 2 cut in excise levied on fuels. States like Maharastra and Gujarat responded by slashing VAT levied on the two commodities. Since the cuts were not part of the last economic data cycle, government hopes there might be further reduction in inflation figures as fuels drive prices in the economy.
But that is not all. The steady decline in industrial output in the last few quarters and exports were impacting growth figures and the govt was facing hostile fire from friends and foes, including senior bjp leader and ex-Finance Minister Yashwant Sinha, after GDP growth was revised downward by RBI, the World Bank and the IMF. The government was visibly on the back foot as the data couldn't be denied.
Yashwant Sinha launched a frontal attack claiming things were so bad that he "had to speak up" against the government. The BJP's internal assessment too indicated that the fallout of note ban and GST launch was hurting the government's image. Amidst the rising negative chorus PM Modi stepped in and announced that the government was ready to ease the hardships faced especially my small businesses due to the GST launch.
The 4.3 per cent rise in index of industrial production (IIP) in August, indicates not only a turnaround from the contraction in June but also a faster growth percentage recorded in July at 0.9 per cent.
At Washington where finance minister is actively trying to bring greater investment and correct the recently impacted image these are welcome changes after a slump to a 36 month low in the June quarter. Even the industrial growth is up at around 2.5 per cent.
Secretary Economic Affairs MR Garg said "This is what we had expected. Due to GST launch from July 1 certain things happened. There was higher stock clearance but not production as recalibration for the new tax regime was on. We expect things will get better."
Speaking exclusively to India Today he said, "We expected the situation to turn. But we didn't expect it to turn so quickly. And we are confident that the improvement is here to stay."
In fact MR Garg felt confident that since all these indicators feed the GDP the next round of GDP data release may also depict an improvement after a steady decline for several quarters
The other positive news is on India's trade deficit front which narrowed to a lowest mark in seven months at $8.98 billion in September.
Post GST exporters were feeling the pinch due to delay in payments reducing their working capital. In its last meeting the GST governing council decided to resolve the issue by easing the situation by depositing nominal amounts for exporters which can be adjusted agains their eventual dues. The proposal for a e-wallet too with a similar concept was cleared as a long term solution.
The government is watching the situation closely and is still not calling it a complete recovery. But sources say the 25.67 per cent rise in merchandise exports in September, way beyond the 18.1 per cent increase in imports is a positive development
Mr Garg said, "The government has been responsive to the challenges. Several measures initiated in the recent past will bring more dividend. Plus the government is giving a huge infrastructure expenditure push which will create a more conducive path for a better growth trajectory."
The government feels that the positive movements on all these parameters will eventually improve the ecosystem, thus creating a more fertile ground for job generation which is proving to be a politico-economic Waterloo for the govt These numbers do not say that the economy has emerged completely out of the pit as the data needs to remain consistently good for several more quarters, but the current numbers will weaken the political campaign against the Modi government.