The Big Story: Growling growth

India's economic growth slowed down to just 7.1% in the first quarter of fiscal year 2016-17, the lowest figure posted in six quarters. Economists and other analysts were predicting Gross Domestic Product growth in the 7.4% to 7.6% range, making the lower actual figure already something of a disappointment. Worse, this will have an effect on the government's target of achieving 8% growth this year. To get there the economy will have to roar along for the next few quarters, and also hope that the Central Statistics Office doesn't revise these figures downward any further, as it has in the recent past.

Investment demand remained low, while mining (-0.4%) and construction (1.5%) were particularly responsible for dragging the growth figure down. A few bright spots were manufacturing, which posted 9.1% growth and electricity at 9.4%. The slowdown of the agriculture sector from 2.6% in the same quarter a year ago to just 1.8% this year was troubling.

The numbers also reiterate our dependence on consumption to drive the economy forward. More than 55% of the GDP was contributed by private consumption, and indeed it is this segment that is expected to grow over the next few months as the country hopes to see the fruits of a good monsoon and the implementation of the Seventh Pay Commission. The Reserve Bank of India's annual report also reiterated this point, saying it expects consumption to be the engine of growth.

That naturally raises inflation concerns, especially since – in addition to the Pay Commission – implementation of the Goods and Services Tax is also looming ahead. The government is most likely looking at a positive couple of quarters to follow, but the shock of this slower-than-expected GDP growth figure should ring a few alarm bells.

Political Pickings

  1. The Supreme Court's decision to return the land in Singur brings Bengal Chief Minister Mamata Banerjee's political career full circle. Will she now open the state to industrialisation?
  2. Forget the Right Wing's hopes of India boycotting the event, politicians are instead making a bee-line for the canonisation ceremony that will see Mother Teresa designated as a Catholic saint on Sunday.
  3. Reliance Industries Limited was unfairly enriched by retaining the gains of gas flowing from an adjacent ONGC field, which both parties knew, the Justice AP Shah committee has concluded.
  4. The Rashtriya Swayamsevak Sangh has removed its Goa chief from the post, a move that is seen as a response to him challenging the Bharatiya Janata Party government in the state. 

Punditry

  1. C Raja Mohan in the Indian Express says Prime Minister Narendra Modi should offer "unstinting support" to Egypt's Abdel Fatah Al-Sisi to build on New Delhi's engagement with West Asia.
  2. A leader in the Hindu endorses Finance Minister Arun Jaitley's push to advance the Budget. 
  3. Consumers are not the bottleneck in moving from cash to digital payments: merchants are, writes Rahul Matthan in Mint. 

Giggles

Don't Miss

Rohini Kejriwal speaks to TONA, an anonymous German street artist who has left his mark from Delhi to Kochi.

Can you explain what this recurrent theme means to you?

As a human being, I am inspired by almost everything around me. This is especially more so when I am touched by emotional vibes. The idea is to capture essential emotions and give them back to the people on the streets. Right now, I’m doing a series of works that are centred around kids whom I photographed on the streets. I am transforming those photos into stencils and painting them on the streets so that everybody can have any kind of possible interaction.