{"id":27538,"date":"2018-10-23T14:39:24","date_gmt":"2018-10-23T09:09:24","guid":{"rendered":"https:\/\/blog.forumias.com\/?p=27538"},"modified":"2018-10-23T14:39:24","modified_gmt":"2018-10-23T09:09:24","slug":"cause-for-caution","status":"publish","type":"post","link":"https:\/\/forumias.com\/blog\/cause-for-caution\/","title":{"rendered":"Cause for caution"},"content":{"rendered":"<p><a href=\"https:\/\/www.thehindu.com\/todays-paper\/tp-opinion\/cause-for-caution\/article24920661.ece\">Cause for caution<\/a><\/p>\n<p><strong>News:<\/strong><\/p>\n<ol>\n<li>India&#8217;s GDP growth rate stands at 8.2% for the first quarter (April-June) of this year.<\/li>\n<\/ol>\n<p><strong>Important facts:<\/strong><\/p>\n<ol start=\"2\">\n<li>The growth rate estimates need to be interpreted in the backdrop of:<\/li>\n<\/ol>\n<ul>\n<li>Depreciating rupee.<\/li>\n<li>Rising NPAs.<\/li>\n<li>Widening trade deficit.<\/li>\n<li>Shooting fuel prices.<\/li>\n<\/ul>\n<ol start=\"3\">\n<li>Despite all these concerning economic trends, the GDP rate presents a robust picture.<\/li>\n<li>Partly, it can be explained by low base effect i.e. low growth rate in the previous year gives inflated effect on the growth rate of the present year<\/li>\n<li>Deeper understanding of this growth paradox require sector wise analysis:<\/li>\n<\/ol>\n<ul>\n<li>Agriculture: agricultural GDP growth quickened as two successive years of good rains improved farm produce, but remained low.<\/li>\n<li>Manufacturing and construction: both the industries are gaining revival after the shock of demonetisation and simplification of GST.<\/li>\n<li>Services: the growth rate of this sector slowed down, still grew faster than agricultural GDP.<\/li>\n<li>Rural wage growth has remained stagnant for the past four years.<\/li>\n<li>Consumer Industries: they are reporting robust sales growth.<\/li>\n<li>Powered by government salary and pension hikes, private consumption growth has quickened.<\/li>\n<li>The share of investments in the GDP has reduced &#8211; a direct consequence of NPA crisis.<\/li>\n<li>Banking: only a little progress made in recapitalisation and in reforming Public sector Banks.<\/li>\n<\/ul>\n<ol start=\"6\">\n<li>Challenge before the government:<\/li>\n<\/ol>\n<ul>\n<li>The consumption driven growth is not sustainable after a point, especially if it is financed by government deficit.<\/li>\n<li>Mounting macro-economic pressures such as rising crude prices, risk of rising inter-country trade war etc.<\/li>\n<\/ul>\n<ol start=\"7\">\n<li>Suggestive measures and growth dilemma before the government:<\/li>\n<\/ol>\n<ul>\n<li>Currency devaluation to arrest the trade deficit, but it will also inflate retail fuel prices.<\/li>\n<li>Tax cuts on fuel to restrict fuel price hikes will widen fiscal deficit.<\/li>\n<li>RBI can increase interest rates to stabilise rupee, but it will increase the cost of borrowing and affect the investments.<\/li>\n<\/ul>\n<ol start=\"8\">\n<li>Way forward<\/li>\n<\/ol>\n<ul>\n<li>Removing bottlenecks and bringing efficiency in the supply chains.<\/li>\n<li>Reducing the dependence on fossils and accelerating transition to renewable source of energy.<\/li>\n<li>Inclusion of modern technologies in the manufacturing to boost Make in India, and shorten trade deficit<\/li>\n<\/ul>\n","protected":false},"excerpt":{"rendered":"<p>Cause for caution News: India&#8217;s GDP growth rate stands at 8.2% for the first quarter (April-June) of this year. Important facts: The growth rate estimates need to be interpreted in the backdrop of: Depreciating rupee. Rising NPAs. Widening trade deficit. Shooting fuel prices. Despite all these concerning economic trends, the GDP rate presents a robust&hellip; <a class=\"more-link\" href=\"https:\/\/forumias.com\/blog\/cause-for-caution\/\">Continue reading <span class=\"screen-reader-text\">Cause for caution<\/span><\/a><\/p>\n","protected":false},"author":61,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"jetpack_post_was_ever_published":false,"footnotes":""},"categories":[555],"tags":[],"class_list":["post-27538","post","type-post","status-publish","format-standard","hentry","category-test-1","entry"],"jetpack_featured_media_url":"","views":{"total":0,"cached_at":"","cached_date":1704861730},"jetpack_sharing_enabled":true,"_links":{"self":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/posts\/27538","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\/61"}],"replies":[{"embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/comments?post=27538"}],"version-history":[{"count":0,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/posts\/27538\/revisions"}],"wp:attachment":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/media?parent=27538"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/categories?post=27538"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/tags?post=27538"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}