'Hit by double whammy of low growth, high inflation': Cong on economy's state
The Ministry of Statistics and Programme Implementation on Friday released data on the Indian economy's state. The data showed that the economy rose by 0.4% in the October to December quarter (Q3 FY21), signalling an improvement in the economic health of the country after two-quarters of slide. Meanwhile, the National Statistical Office (NSO), in its second advance estimates of national accounts, projected 8 per cent contraction in 2020-21.
The Congress responded to the data and said the government spent a lot less than what was needed to revive the Indian economy. "We have truly been hit by the double whammy of low growth and high inflation for which gross mismanagement and the unpardonable failure of leadership of the Modi government is solely responsible," Congress leader Randeep Surjewala said.
Here is the full statement of Randeep Singh Surjewala:
"Third quarter GDP data proves yet again that fault lines in the Indian economy are more visible than ever before. The economy has grown by a mere 0.4% in the third quarter of financial year 2020-21, which is far below estimation.
What continues to be an area of concern, however, is the advance estimates for the entire financial year. CSO has lowered GDP Growth rate for FY2020-21 from its previous estimated -7.7% to now -8%. Simply put, it means that the economy will perform worse than what is the RBI or the CSO or even the Union Budget had initially expected. A further contraction means there will be lesser investment and fewer jobs created. It is also important to point out here that Q1 GDP has now been revised lower to -24.4% from the previous reported contraction of -23.9%. Clearly, the ill planned and poorly executed lockdown took a huge toll on the economy, which was already suffering from the twin body-blows of demonetisation and the ill-conceived GST.
While manufacturing has grown by 1.6% in Q3 vs 0.6% in the previous quarter, what is worrying is that services sector has continued to contract and has fallen to -7.7%. This slump in trade, hotels, hospitality and communication is of big concern because of their principal weightage in the calculation of GDP. It is a grave apprehension of every economist that the sector may not see recovery anytime soon.
A more detailed analysis of the GDP numbers also proves the misplaced and irrational exuberance in India’s stock markets. It is crystal clear that the pain in the informal sector is far from over and this sector needs support on the policy front, a fact Modi Government constantly turns a blind eye towards. The trouble in India’s informal economy is being reflected in the rising NPA of NBFCs but the government is oblivious to the suffering from micro, small and medium enterprises.
Private consumption expenditure at Rs.21.2 lakh crore is down by 2.4% on a year-on-year basis. It is clear that while demand for goods is picking up, the demand for services, which is the biggest contributor to our GDP, is trailing and is unlikely to revive for a few quarters in the future.
Contrary to claims, Modi Government has spent a lot less than what is needed to revive the Indian economy. Public administration in Q3 has contracted by -1.5%. Government Final Consumption Expenditure at Rs.3.55 lakh crore in the third quarter is lower than the Rs.3.59 lakh crore, that was spent in the same quarter last year.
Q3 GDP growth numbers carry a big lesson for the insensitive Modi Government. Agriculture, which has grown at 3.9% in Q3, has continued to hold steady and which is why the government should stop treating the farmers so cruelly and insensitively. It should listen to the woes of millions of farmers agitating for justice and resolve their plight by rolling back the three anti-agriculture black laws.
What is also worrying is that despite growth being anaemic, prices are shooting through the roof. Inflation levels have been consistently rising, which will put pressure on the RBI to eventually raise interest rates and dampen whatever little demand there is in the Indian economy.
We have truly been hit by the double whammy of low growth and high inflation for which gross mismanagement and the unpardonable failure of leadership of Modi Government is solely responsible. Let us hope that an ignorant PM and FM finally realize the truth."