ET Online survey: Is 5% growth the new normal for India? A lot hinges on this Budget
Government's own forecast released in the first week of January showed that the economy is likely to grow at 5% in FY20 — the weakest pace in 11 years. India has not seen such a low GDP score since the 3.1% in FY09, the year when the global financial crisis wrecked economies everywhere.
The numbers in the first advance estimates of the National Statistical Office (NSO) reflect a steep fall from the 6.8% growth registered in FY19.
The latest projections are just a continuation of the declining growth trend witnessed over the past few quarters. GDP growth in the first quarter had come in at 5%, before falling even lower to 4.5% in the second.
Given how things have lately been, how good or bad are the odds of the economy going back to those glory days of 8-9% GDP growth, witnessed not too long ago? Or rather, will India ever go back to that high growth path or will it have to accept 5% GDP as the new normal?
This year's ET Online pre-Budget survey put forward this question to its readers. The findings make for interesting reading.
Despite all the current travails of the economy, not many people believe that India is a gone case. The view that heady days are over for India did not garner even 12% of the total votes.
More than 29% of the survey respondents are of the view that there is more steam left in the economy, and that it is just a matter of time before things fall into place again.
According to our in-house analysts, these two groups' confidence on the economy possibly stems in large part from the measures the go nment has introduced over the past few months. The steps taken by Modi go nment include a steep cut in corporate tax rates and an over Rs 1 lakh crore plan for infrastructure, apart from a rescue plan for stalled realty projects. Besides, there are indications that the trade war that kept the world roiled for much of the last year may finally be losing its intensity.
However, considerable challenges still remain. Even if the trade war subsides, it may not lead to major improvements in global trade as the world economy is currently mired in a slowdown. At present, the global growth rate stands at a measly 3%, and economists don't see much upside in the near term.
Also, Modi govt's hands remain fiscally tied, and there is little hope of any material improvement in the situation in the near term.
On top of that, all recent monetary policy interventions have failed to yield desired results. Modi govt has stuck to its guns on adhering to its stated fiscal deficit target, but breaching the target seems to be the only practical way to jumpstart growth at this point. Such a fluid, unsettled situation could be the reason why as many as 22% of the participants refrained from giving a definitive answer to our question.
These should ideally include the likes of (a) reforming the investment scene, (b) less and less role of govt in business, and last but not least (c) land and labour reforms. But these could turn out to be a political hot potato that will involve taking large-scale electoral risks.
Can Nirmala Sitharaman do it this time? February 1 will provide the answer.
译文来源：三泰虎 http://www.santaihu.com/49248.html 译者：Joyceliu
The article reads "The steps taken by Modi go nment include a steep cut in corporate tax rates". By this sentence you are trying to tell people that high and unjust corporate tax were introduced by the previous UPA go nment and as part of the Modi Government reforms it has been reduced. No you are wrong...It was introduced by the Modi Government in the last budget without understanding the implications and was withdrawn in a paNic state. So correcting a mistake is not called reforms.
Murali Krishna Brahmandam
The only thing this budget will do is to drive Rupee stronger and stronger. That will solve most of Indian problems. All the rest are trash - do not waste time writing any other garbage.
wont that impact exports ?
Shaleen Nath Tripathi
there is not much difference between nominal gdp and real gdp as such, growth rate would remain same... because inflation has only changed little... the formula for calculating real gdp is nominal gdp/deflator... INDIA has grown 10.8% in the current year... base year would also be deflated... There is not much difference between nominal gdp and real gdp growth rate when inflation had been on the lowside... in this situation nominal gdp and real gdp would remain same...
Murali Krishna Brahmandam
Third-rate governance by third-rate go nments by third-rate political parties= 5 percent growth. No hope as long the above continues.
In other words, income from various investments including rents on leased assets ought to be deducted at source and must not be added to the main sources of income like business, salary,consultancy, profession and so on. Govt is clearly obsessed with tax collections without corresponding efforts to augment people's earnings. Another obsession is apparently economically unproductive freebies. These have widened fiscal deficit. Lack of tight Project monitoring is yet another fragile area which is leading to cost escalation. Govt needs to focus on each high value project implementation which has been centrally assisted. Many state go nments ruled by BJP have lagged behind in effective project implementation. Several ministers and ministries at the centre and in states are performing sub-optimally.BJP has paid heavy political price for the same in all these years.
Fair analysis. A few commentaries may be desirable. Cut in personal income tax is a necessary but not sufficient condition for improving consumer demands. It needs to be supplemented by reasonable returns on personal savings and investments to keep a healthy balance between supply and demand forces. In Indian context, inflation does not capture very high cost escalation on education and health,which makes existing real interest returns on bank deposits and borrowing costs low. Demand for further rate transmission is totally misplaced,as it will further erode households income. Govt policies in several areas are not consistent with avowed objectives of ease of living and investments. The tax on interest incomes,dividends, capital gains across asset classes and time periods should be 10% and collected at source as withholding tax and aforesaid incomes should not be clubbed with main income of people/companies.
Govt objective is not GDP %. They are behind hate speech, hinduvita, dividing society etc.
Liked - shouldn't appeasement politics stop ?
Singh Is King
India going back to Vedic rate of growth after Hindu rate of growth.
the survey results tell us everything. More than 75% believe its going to become better, i am a part of that 75%!
If Compare to UPA its worst NDA is bad. Worst is coming as World is neglecting INDIA presence
Better not to comment on this any further, as enough is debated. They will do just what they want.
It doesn't have to be this way. Only if go nment could spend less, interest rates would go down, inflation would go down. It would increase the credit flow to MSMEs and everybody will benefit by way of job creation.