Dhaka, Bangladesh
Make up for lost time

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Make up for lost time

Prime Minister Narendra Modi’s election campaign, staying clear of bread-and-butter issues, successfully swayed voter attention away from economic hardships. Having won a thumping mandate, his government in its second tenure must now devote itself to a well-thought-out strategy for economic reforms. Official estimates released on Friday, the new government’s first day in office, show GDP growth slowed to a five-year low of 6.8% in 2018-19, even as the unemployment rate rose to a 45-year high of 6.1% in 2017-18. Agriculture gross value added (GVA) growth is estimated at negative 0.1% and manufacturing GVA growth at 3.1% in the January-March quarter. The economy is struggling with an investments and a manufacturing slowdown, rural distress, unremunerative farm incomes, stagnating exports, a banking and financial mess and a jobs crisis. Sales figures from fast moving goods makers and continuing production cuts at car manufacturers confirm that consumption spending have slowed. The top economic priority for the new Modi government ought to be credible course correction in its attitude to policy — its formulation, articulation and the setting of goals. The previous Modi government began well but soon lost direction. The announced plans for what looked like a blueprint for structural reforms — spanning an overhaul of labour and land policies and a much-needed manufacturing push, ‘Make In India’, for absorbing the slack from the farms — had been abandoned by the end of 2015. The initial energy and enthusiasm gave way to misadventures such as demonetisation and the poorly designed rollout of the Goods and Services Tax (GST) regime. Despite repeated reminders to the Prime Minister’s Office from Finance Ministry bureaucrats, the decrepit public banking system and the problems of the financial sector received little policy attention. Even the insolvency and bankruptcy reform, a sound economic reform, that got rolled out rather gradually and tentatively is already in danger of getting diluted. The cumulative neglect of reforms over the years by Mr. Modi and his predecessors, including Manmohan Singh, has ensured that the economy is falling short of both its growth potential and the people’s aspirations. --- India Today

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