India, the baby elephant, having more than 65 per cent of young population (below 45 years), is full of aspirations, expectations and bubbling with energy. India is going through sea changes in it hormonal structure, bringing room for uncertainty, risks and complex market scenarios in dynamic/volatile market driven economic systems.
The figures for July-September 2017 (Q2) released by CSO at 5:30 pm on Thursday revealed 6.3 per cent growth in GDP and the GVA rose 6.1 per cent, bringing positive vibes and reinforcing trust in economic growth and development in markets amongst market participants worldwide. These induce greater confidence in the stringent reform process churning India for the last one year. Both these figures amongst sectoral growth charts are very encouraging as well.
However, the key concern of the government is that growth is not being felt by people at large. Increased employment, which need to be a reflection of GDP/GVA growth, bringing smiles to the people, is still seen as a far-fetched idea.
When we look at inflation, we see that the wholesale price index (WPI) has shown upward trends on food (by 3.4 per cent), minerals (by 2.1 per cent), maunufacturing (by 2.4 per cent) and commodities (by 2.6 per cent) with exception of electricity which declined by 1.6 per cent in Q2. The upswing in inflation is much needed for inducing growth and confidence in the economy today given the sluggishness observed post-demonetisation (due to cash crunch or breaking old traditions of cash economy) and introduction of GST (due to unclear rules of the gameand implementation at ground level) for all segments of society, especially the MSME and the common man. However, there needs to be a serious check on rising food prices due to factors like hoarding, fuel prices, new environmental norms, poor storage facilities and burning of crops.
The rate in gross fixed capital formation (GFCF) at both current and constant prices has seen growth at 6.3 per cent and 4.7 per cent respectively, which are higher than last year. This gives a reflection of upward movements in investments within the country. We can see a substantial increase of FDI flows and interest by industry participants from all over the world in the last three quarters.
The GDP pie has had a major shift from agro and industry to the services sector. This trend still seems to go strong. We certainly have more growth capturing capacity in the services sector. However, both agriculture and industry need to be around 25 per cent and 45 per cent respectively as against the current 16.5 per cent and 28.8 per cent from the perspective of jobs, employment and agriculture being a feader for industry and services sector growth.
Aman Agarwal
Models proposed by IIF studies of J.D. Agarwal and Aman Agarwal (2004) for financial development and by J.D. Agarwal, Manju Agarwal, Aman Agarwal and Yamini Agarwal (2017) for setting up national labour exchange (NLx) for efficient labour market, full employment and maximising wealth based on the “Theory of Employment, Wealth and Efficient Labour Market through National Labour Exchange” may be worthwhile for economists to look at to induce sustainable jobs and growth given the revamped 'Make in India' Initiative of Prime Minister Narendra Modi.
(The writer is the is the director and professor of finance at Indian Institute of Finance and executive editor at Finance India)
