Dinesh Kamath's Editorial 'India’s GDP has expanded' that was published in Newsband

India’s GDP has expanded

India’s GDP expanded at a brisk 7.2% pace in the three months ended December. The numbers are cause for cheer and optimism.

Acceleration in GDP growth is welcome; it has the potential to improve Income. It is increased government expenditure that has undergirded this expansion; and farm sector has witnessed slowed growth. Government expenditure is ticklish; it is in favour of unproductive spending and even investment spending is inefficient causing further Inflation. To cushion this, vast improvements in private green field investment has to happen and this is not quite happening; certainly not sufficient to annul the effects of government inefficiency. GDP growth is more due to service sector expansion - in incomes rather than in employment. This causes demand and there is no guarantee that proportionate consumption goods are enough and fast in coming - superior foods and housing, drinking water, energy for the Poor. GDP growth focused on these latter has to be attempted. Production by, for and to the poor in villages and city slums holds the key for lasting welfare in India.

Primarily the three laggards in the last quarter like mining; utility services (including electricity, gas, and water supply); and trade, hotels, transport and communication services would definitely be taken care of by the government to ameliorate the situation but it's time to appreciate as well as applaud the policy taken by the government especially for the opposition parties who always do politics even at the cost of country; if they are nation builders, they would, of course, appreciate and applaud because all politicians are required to understand that the political thinking of common men has widened and they also comprehend what is good and bad and therefore they should indulge in constructive politics rather than destructive politics if they want to survive. Secondly, the cause for concern is agricultural growth only 3% which was 6.3 % in the corresponding fiscal while the government has targeted to double the income of farmers by the end of 2022.

The GDP numbers for third quarter are encouraging but the danger of slipping back are also real. The availability of bank credit could be a cause of worry as the banks might be reluctant to make big advances in view of banking frauds and emphasis on greater accountability of bankers in coming days. Greater scrutiny and indecision on the part of bankers in making advances can hamper expansion proposals and new investment in industry and business. This could be akin to policy paralysis in UPA government. Inflation and price stability could also be a cause of concern with breach of fiscal deficit targets. Overall outlook on economy, however, is not as gloomy as was given to understand by critics a couple of months ago.