Every Saturday, Meenu Kaushal, a teacher who stays in Mayur Vihar, and her friend drive down 8 km to Ghazipur to buy their weekly stock of fruits and vegetables from a wholesale market on the eastern fringes of the national capital.
This way their costs come down by about a quarter, compared to the neighbourhood vegetable vendor.
“Less fruits, less biscuits, less detergent and less movies at multiplexes. We are cutting expenses where we can,” said Kaushal.
For finance minister Pranab Mukherjee and RBI governor D Subbarao, the slew of recent data adds to an array of problems, graver than just mounting grocery, vegetable and travel bills.
The slowdown is here. It’s real and hurting.
Last week, the government’s annual report card presented a not-so-pretty picture. The growth rate of the economy has slowed to 5.3% in the last quarter of 2011-12, the worst since 2003-04.
So, what’s behind the sudden turnabout in an economy which, until not so long ago, was the global investors’ hotspot? It appears that domestic uncertainty and policy missteps were hurting India’s prospects more than external factors.
A few days ago, the union cabinet quickly bottled up a proposal to open the pension sector to foreign investment for fear of its key ally, Trinamool Congress. Experts point out that managing a restive alliance has consumed more time than prudent policy making.
“The government should bring economic reforms. Acting first and thinking later will not work,” Yashwant Sinha, BJP leader and former finance minister told HT. “Before putting the pensions bill on the Cabinet’s agenda today, for instance, it should have spoken to (Trinamool Congress) chief Mamata Banerjee.”
Days after party leaders discussed the political fallout of economic slowdown, lower job growth and high inflation in the Congress Working Committee (CWC), the ruling party’s highest decision making body, Prime Minister Manmohan Singh presided over a meeting that announced a set of ambitious targets to fast-track infrastructure projects spanning several sectors across expressways and bullet trains.
Experts say that immediate action is required on several issues such as cutting interest rates and easing foreign direct investment norms (see graphic).
“Stubborn inflation, below-trend growth and rupee depreciation are symptoms of the underlying economic imbalances due to a combination of policy incoherence, shifting global risk appetite and a comatose government,” said Rajeev Malik, senior economist at broking and research firm CLSA.