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Q. Slowdown in economic growth: Comment on recent projection of Central Statistics Office about Indian economy.
Jan 09, 2017 Related to : GS Paper-3

Ans :

Introduction-

Recently Central Statistics Office (CSO) has released growth rate for 7 months (April- October) of Indian economy. According to CSO India’s gross domestic output is expected to grow at a slower pace of 7.1% in 2016-17 compared to the 7.6% clocked in the previous year. These figures reflect that India’s economic momentum has slowed down to some extent. 

Key aspects CSO projection-

  • Mining and quarrying is estimated to shrink 1.8% this year after expanding 7.4% a year earlier.
  • Electricity, gas, water supply and other utility services, collectively an indicator of broader economic activity is slowing to% from 6.6%.
  • The agriculture, forestry and fishing sector, which is estimated to expand 4.1% this fiscal compared with the previous period’s 1.2%.
  • Per capita net income is expected to rise by 10.4%

Issues-

  • CSO these projections were based solely on data from the first seven months through October and do not factor in the impact from the withdrawal of high-value banknotes and the consequent cash crunch.
  • Two key engines of the economy, manufacturing and services, are losing momentum faster than was anticipated, and this could spell trouble for the coming quarters.
  • It has been witnessed the dip in demand, due to weak investor and consumer sentiment.

What needs be done-?

  • The Government prepare for a spending push in the Budget, both in physical and social infrastructure, to redress the demand compression.
  • Banks should lend money easily and if possible RBI should work on to reduce the repo rates. 
  • All actors of state must have to work in a substantial fiscal fillip to help rekindle economic momentum.

Conclusion-

CSO projection has raised alarm on India’s slowing growth momentum. Slowdown has caused due to various internal as well as external factors. Hence now government must push its spending on various sectors, so that economy can bounce back in coming fiscal.  


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