economic growth

India’s economic slowdown: Finance Ministry admits GDP growth could continue to fall

Ministry officials pointed to an IMF forecast which suggested India will only achieve 8% GDP growth in 2022.

Finance Minister Arun Jaitley on Tuesday announced what he called an “unprecedented” plan to pump in Rs 2.11 lakh crore into public sector banks with the aim of helping tide over the Non-Performing Assets problem that has weighed them down for much of the last decade. As part of the announcement, a number of officials from the Finance Ministry also gave presentations on the state of the economy and the amount of money the government was pumping into infrastructure.

As part of that presentation, the Secretary of the Department of Economic Affairs Subhash Chandra Garg talked about a number of economic indicators, pointing out that foreign exchange reserves are in a comfortable place, that inflation has fallen and that India has remained on track to reduce its current account deficit.

He also brought up the question of the Gross Domestic Product, which has been a thorny one for the government of late, especially after the numbers from the first quarter of fiscal year 2017-’18, which was the sixth consecutive quarter of slowing growth for India.

The numbers caused much consternation at the time, since it was coupled with news of the failure of Prime Minister Narendra Modi’s demonetisation plan and concerns about the rollout of the Goods and Services Tax. Many took this as proof that the Bharatiya Janata Party-ruled government has slipped up in its management of the economy, which appears to have been hit by several shocks.

The government and leaders from the BJP, however, disagreed. BJP President Amit Shah had said the numbers were only due to “technical reasons”. Prime Minister Narendra Modi tried to point out that the GDP was often much worse during the previous United Progressive Alliance government. Niti Aayog Vice Chairman Rajiv Kumar said that the dowturn is over and GDP growth will bounce back in the next couple of quarters.

Garg, while giving his presentation, did not toe this line.

Garg’s graph, shown above, includes the Chief Statistical Office’s GDP figures for the last few years, showing a steep drop in the past year. Even more significantly, the graph uses the International Monetary Fund’s forecast for India’s GDP growth over the next few years. Garg specifically mentioned this in his presentation, calling it an independent view of the economy.

This IMF forecast, as endorsed now by the finance ministry, is a lot less optimistic than the government’s claims about the economy so far. For starters, it suggests that the GDP growth will continue to drop, bottoming out at just over 6.5% annual at the end of fiscal year 2018-’19. Following that it will start to revive, but will continue to be gradual. Indeed, the graph doesn’t show a recovery to 8% growth – which was achieved in 2016 – until Fiscal Year 2021-’22.

The legend going along with the graph calls it a “temporary economic slowdown bottoming out” and insists that the GDP is projected to grow much faster in times to come. But if the finance ministry does indeed endorse the IMF forecast, that suggests it will be sometime before India gets back to truly high growth numbers – and more than half a decade before double-digit growth is even on the cards.

Support our journalism by subscribing to Scroll+ here. We welcome your comments at letters@scroll.in.
Sponsored Content BY 

Do you really need to use that plastic straw?

The hazards of single-use plastic items, and what to use instead.

In June 2018, a distressed whale in Thailand made headlines around the world. After an autopsy it’s cause of death was determined to be more than 80 plastic bags it had ingested. The pictures caused great concern and brought into focus the urgency of the fight against single-use plastic. This term refers to use-and-throw plastic products that are designed for one-time use, such as takeaway spoons and forks, polythene bags styrofoam cups etc. In its report on single-use plastics, the United Nations Environment Programme (UNEP) has described how single-use plastics have a far-reaching impact in the environment.

Dense quantity of plastic litter means sights such as the distressed whale in Thailand aren’t uncommon. Plastic products have been found in the airways and stomachs of hundreds of marine and land species. Plastic bags, especially, confuse turtles who mistake them for jellyfish - their food. They can even exacerbate health crises, such as a malarial outbreak, by clogging sewers and creating ideal conditions for vector-borne diseases to thrive. In 1988, poor drainage made worse by plastic clogging contributed to the devastating Bangladesh floods in which two-thirds of the country was submerged.

Plastic litter can, moreover, cause physiological harm. Burning plastic waste for cooking fuel and in open air pits releases harmful gases in the air, contributing to poor air quality especially in poorer countries where these practices are common. But plastic needn’t even be burned to cause physiological harm. The toxic chemical additives in the manufacturing process of plastics remain in animal tissue, which is then consumed by humans. These highly toxic and carcinogenic substances (benzene, styrene etc.) can cause damage to nervous systems, lungs and reproductive organs.

The European Commission recently released a list of top 10 single-use plastic items that it plans to ban in the near future. These items are ubiquitous as trash across the world’s beaches, even the pristine, seemingly untouched ones. Some of them, such as styrofoam cups, take up to a 1,000 years to photodegrade (the breakdown of substances by exposure to UV and infrared rays from sunlight), disintegrating into microplastics, another health hazard.

More than 60 countries have introduced levies and bans to discourage the use of single-use plastics. Morocco and Rwanda have emerged as inspiring success stories of such policies. Rwanda, in fact, is now among the cleanest countries on Earth. In India, Maharashtra became the 18th state to effect a ban on disposable plastic items in March 2018. Now India plans to replicate the decision on a national level, aiming to eliminate single-use plastics entirely by 2022. While government efforts are important to encourage industries to redesign their production methods, individuals too can take steps to minimise their consumption, and littering, of single-use plastics. Most of these actions are low on effort, but can cause a significant reduction in plastic waste in the environment, if the return of Olive Ridley turtles to a Mumbai beach are anything to go by.

To know more about the single-use plastics problem, visit Planet or Plastic portal, National Geographic’s multi-year effort to raise awareness about the global plastic trash crisis. From microplastics in cosmetics to haunting art on plastic pollution, Planet or Plastic is a comprehensive resource on the problem. You can take the pledge to reduce your use of single-use plastics, here.

This article was produced by the Scroll marketing team on behalf of National Geographic, and not by the Scroll editorial team.