{"id":241941,"date":"2023-05-11T20:12:04","date_gmt":"2023-05-11T14:42:04","guid":{"rendered":"https:\/\/blog.forumias.com\/?p=241941"},"modified":"2023-05-11T20:12:04","modified_gmt":"2023-05-11T14:42:04","slug":"economic-weather-warning","status":"publish","type":"post","link":"https:\/\/forumias.com\/blog\/economic-weather-warning\/","title":{"rendered":"Economic weather warning"},"content":{"rendered":"\n

Source-<\/strong> The post is based on the article \u201cEconomic weather warning\u201d published in the \u201cThe Indian Express\u201d on 11th May 2023.<\/p>\n

Syllabus: <\/strong>GS3- Indian economy<\/p>\n

Inflation<\/strong>– The MPC (Monetary Policy Committee) meeting gives the impression that inflation is well under control. This is good from a policy stance<\/strong> but is worrying for households. They are facing a relentless increase <\/strong>in the prices of goods and services.<\/p>\n

They have experienced a cumulative inflation of over 18% in the last three years.<\/p>\n

Growth<\/strong>– The growth picture is also ambivalent<\/strong>. India is among the fastest-growing economies <\/strong>at 6-6.5%. But this picture too is different when looked at from a medium-term perspective. <\/strong><\/p>\n

There is not too much optimism<\/strong> about being on track for the 8% plus growth rate<\/strong>. The new normal <\/strong>appears to be 6-7%.<\/p>\n

Exports<\/strong>– Policymakers are satisfied with new heights achieved in the exports of goods and services.<\/strong> Services have gone against the trend of the global slowdown<\/strong> in 2022. But exports of merchandise<\/strong> are not too satisfactory.<\/p>\n

For example, if refinery products <\/strong>are excluded from the export’s basket<\/strong>, there has been a fall in FY23.<\/p>\n

Production-Linked Incentive (PLI) scheme<\/strong> aspires to make India the centre of all global chains. It seems to be only an aspiration <\/strong>as of today.<\/p>\n

Indian exports are linked with global growth<\/strong> and a slowdown is not good for them. In 2022, higher crude prices<\/strong> got reflected in both imports and exports.<\/p>\n

Investment<\/strong>– The investment picture has two sides as well. The official position is that investment is picking up in the private sector. It should get reflected on the funding side. <\/strong><\/p>\n

In the investment conclaves, major companies show a lot of interest. But, signing MoUs<\/strong> means little when not converted to action.<\/p>\n

Data on all funding sources<\/strong> show that there is a slowdown. Bank credit<\/strong> is buoyant more on the retail end than manufacturing. Debt issuances<\/strong> are dominated by the financial sector. Manufacturing<\/strong> is still lagging.<\/p>\n

External Commercial Borrowings<\/strong> have slowed down mainly due to the higher cost of loans.<\/p>\n

Consumption<\/strong>– The consumption picture is also fuzzy. There are reports of rural demand being good in FY23. But, it is not reflected in the production of consumer goods.<\/p>\n

The 16% growth in nominal consumption in FY23 would tantamount to just 7% in real terms, as inflation has pushed up costs. And this was also brought about by pent-up demand for both goods and services post the full removal of the lockdown in 2022.<\/p>\n

Employment<\/strong>– A growing economy needs to create more jobs if consumption and investment <\/strong>have to be sustained. As per CMIE data,<\/strong> the average unemployment rate<\/strong> is around 7.5%. It can now be considered the natural rate of unemployment<\/strong> in India.<\/p>\n

There are concerns related to the labour participation rate<\/strong>. It has come down\u00a0 from 46.2% in FY17 to 39.5% in FY23. It indicates a growing population in the working age group that is not interested in working. <\/strong><\/p>\n

There has been a series of layoffs<\/strong> in several IT and fintech companies. The promise shown by start-ups has not yet been realised and hence.<\/p>\n

Banking<\/strong>– The bright spot in this picture is the banking sector. The cleaning up operations<\/strong> and slowdown in the economy<\/strong> has helped the banks, especially in the public sector, to emerge stronger.<\/p>\n

NPA levels<\/strong> have come down and banks are well-capitalised. Also, profitability<\/strong> has improved. Quality of assets<\/strong> means lower provisioning for NPAs. <\/strong><\/p>\n

When the economy gets into the take-off mode, banks will be well equipped to provide the funds. This was not the case 4-5 years ago.<\/p>\n","protected":false},"excerpt":{"rendered":"

Source- The post is based on the article \u201cEconomic weather warning\u201d published in the \u201cThe Indian Express\u201d on 11th May 2023. Syllabus: GS3- Indian economy Inflation– The MPC (Monetary Policy Committee) meeting gives the impression that inflation is well under control. This is good from a policy stance but is worrying for households. They are… Continue reading Economic weather warning<\/span><\/a><\/p>\n","protected":false},"author":10320,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"jetpack_post_was_ever_published":false,"footnotes":""},"categories":[1230,9],"tags":[216,10500],"class_list":["post-241941","post","type-post","status-publish","format-standard","hentry","category-9-pm-daily-articles","category-public","tag-gs-paper-3","tag-indian-express","entry"],"jetpack_featured_media_url":"","views":{"total":0,"cached_at":"","cached_date":1704889042},"jetpack_sharing_enabled":true,"_links":{"self":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/posts\/241941","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/users\/10320"}],"replies":[{"embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/comments?post=241941"}],"version-history":[{"count":0,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/posts\/241941\/revisions"}],"wp:attachment":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/media?parent=241941"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/categories?post=241941"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/tags?post=241941"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}