Review of Indian Economy 2015 – Marred by Politics :: A jaundiced eye-view

The year 2015 was some kind of a political nightmare for Narendra Modi – the politician. Probably for the first time since 2001 – when he was made Gujarat Chief Minister – never had Modi tasted such difficult situations and sadly for him, he could not give the befitting reply to his detractors – something he had made a sort of habit post-2002.

When calendar year 2001 ended, Modi was a shy Chief Minister, almost a reluctant ruler and often clueless how to capture ‘hamaro Gujarat’ for his saffron party. But since February 27, 2002 train compartment inferno at Godhra, he has shot into limelight by braving through all the challenging times.

Similarly, for him and certainly for his handpicked ‘BJP chief’ Amit Shah, the year 2015 in the ultimate analysis was a year of series of setback. The legislative business was stalled in Rajya Sabha. GST and Land Bill got stuck. Individually top ranking BJP leaders got embroiled into corruption scandals – Sushma Swaraj, Vasundhara Raje and even Modi’s “eyes and ears” Arun Jaitley. 

Electorally, BJP lost two crucial polls badly Delhi and Bihar…. Minorities were isolated further with nuns and churches attacked, Awards returned and the unnecessary beef debate.

Has the countdown for the decline begun? Amid these, new challenges in 2016 remain putting back economy on track, fighting elections in some key states and intra-party differences as BJP veterans like L K Advani, M M Joshi and Yashwant Sinha likely to sustain more pressure against Modi-Amit Shah duo. 

But how has Indian economy remained unhindered – literally ! – given the mood in media and political circle otherwise as if India almost its Indianness in 2015??

A closer look at economy gives up a few take aways. Eight core industries, representing major infrastructure sectors, grew at 2.3 percent in the April-September period of the current fiscal, compared to a rate of 5.3 percent in the same period of the previous fiscal.

Analysts say the fall in growth rate is caused by lower expansion in electricity, coal and cement sectors and negative growth in steel and natural gas sectors.

The mid-year review lowered the economic growth forecast for the current fiscal to the 7-7.5 percent range, from the previously projected 8.1-8.5 per cent, mainly because of lower agricultural output due to deficit rainfall.

Globally, India remained a fastest expanding economy surpassing China. India's external position has improved. Forex reserves are a little above $350 billion in November 2015 as compared to a little over $270 billion in July 2013. Net foreign direct investment (FDI) inflows have increased to $17 billion in the first half of 2015-16 in comparison to $15.8 in the same period last year. 

In the words of Abhishek Lodha, managing director of Lodha Group, “2015 has been a year in which we think that the economy has started healing itself”. India’s GDP grew by an annual rate of 7.4 per cent in the July-to-September quarter, putting it firmly ahead of China, where growth slowed to 6.9 per cent in the same period. 

Another macro analsysis suggests, India’s growth has been “uneven and driven majorly by private consumption and public investment”. Well, it is established economic wisdom that for robust and sustainable growth, private investment needs to grow northbound graph while exports needs to revive. 

So, a safe conclusion is there are miles to go – to take out the country’s economy from the stage when even Dr Manmohan Singh was easily dubbed as an ‘underachiever’.

The government and the pro-Modi would insist that things are improving. The Department of Industrial Policy & Promotion (DIPP) is working on a proposal for simplifying of the overall framework encompassing all industrial sectors and galvanising it with the FDI policy. Reforms to be unfurled gradually in state electricity boards and FDI liberalisation would hopefully put the developmental agenda back on track. The government also plans to come out with bankruptcy guidelines for easier exits of businesses and give protection to lenders and investors.

In the words of Nirmala Sitharaman, the union Commerce Minister, India offers certain sense of stability, which today economies long to have. "India is an inviting investor's domain,” she said. I would like every investor to look at it," Sitharaman said during her visit to Washington in September.

True to her words, global demand, economy and prospects of looking at what could happen in next few months require a lot of light and positive energy. Left to him, the Prime Minister is alcoholic and is making his ministers work.

While detractors would call these mere rhetoric and use strong words like ‘nothing is happening’; looking at certain parameters, for an economy that faces challenges --- it is no less credit that it is able to sustain a certain momentum.

Post-Bihar polls, taking a corrective course, Modi government issued executive orders relaxing FDI norms. The year 2015 also saw Indian stock markets correcting the excess hype created in 2014 following Modi’s victory. The benchmark Bombay Stock Exchange index reached an all-time high of above 30,000 in March but steadily declined to finish the year trading at under 26,000. 

The year 2015 also saw Indian stock markets correcting the excess hype created in 2014 following Modi’s victory. The benchmark Bombay Stock Exchange index reached an all-time high of above 30,000 in March but steadily declined to finish the year trading at under 26,000. 

The continued logjam in the parliament led investors to worry and not without good reason. 2015 also did not bring the hoped-for growth in residential real estate even as bad days seem to be coming to an end.

India also made a move towards creating a more transparent regulated property market with right changes in the long-awaited real estate regulation and development laws.

Finally, to talk about India’s economy – one needs to talk about poverty – as this still remains a curse but also a responsibility. It is tragic that when the world and India as a nation has technological and even economic capacity to abolish poverty, perhaps the greed menace and the fear that quality of life of affluent would be affected is preventing policy makers to achieve so. 

In 1990 the World Bank had selected Poverty Reduction as its main theme, the slogan is most relevant even today 2015-16 – when recession and age-old ill of migration has surfaced globally. In RIC (Russia, India and China) and also BRICS – alongside Brazil and South Africa, India hopes to play a significant role globally. PM Modi is driving his foreign policy with a well-targeted mission. The pro-peace moves with Pakistan at the fag end of December is a right decision. Observers have not missed the underlining theme that economy has been driving force on that front. 

LET HOPE BE THE MASTER OF OUR FATE IN 2016. 

(ends)