GDP figures are promising but far from solid reality

- Prolonged slowdown in private investment will not sustain India's growth - Long wait to see economic recovery in solid and strong 'V' shape

- The situation of 12 crore households in the country earning Rs 2 lakh to 5 lakh per annum has improved the least in a year.

The Indian economy has recorded a record GDP growth of 20.1 per cent in the April-June quarter. At first glance, these growth figures look encouraging and promising, but they seem to be far from the real thing. It may be mentioned that in the June quarter of 2020, the calendar year of the unprecedented epidemic, India's growth rate was hit by a historic 3% as there was a complete lockdown in the entire country at that time.

One thing is clear, the growth rate of the Indian economy had slowed down even before the Koro epidemic. The change that has taken place in the last one year is the distribution of income. By laying off workers, cutting wages and reducing the number of small suppliers, large companies have increased their stakes, paid off debts and strengthened their balance sheets. The increase in earnings and capital gains of the corporate sector and company owners has come at the expense of small businesses which have not received much support from the government.

Mahesh Vyas, in Monitoring Indian Economy, said, "Even after the epidemic subsided, consumer sentiment in July was only half of what it was before the launch of Covid-12 in February 2020." Even worse is the situation of the middle class, which includes 12 crore households in the country earning between Rs 2 lakh and Rs 5 lakh a year, whose condition has improved the least in a year.

Private consumption, which accounts for more than half of India's economy, is at the level it was four years ago. Among other sources of demand, investment grew by 5% in real terms or in inflation-adjusted terms, but was still 15% lower than in April-June 2016. Compared to the same period in 2020, this time saw a strong growth of 2% in exports as there is no nationwide lockdown at present. India's growth strategy is largely to boost the supply side of the economy. Even before Covid-19, the corporate tax rate was reduced. In addition, companies have been promised ઉત્પાદન 3 billion in manufacturing incentives.

More than ૨૫ 15 billion in excess liquidity in the banking system is stimulating markets on the condition that inflation above 5% will remain temporary, interest rates will remain low for a long time, and foreign investors will not withdraw capital without any sudden tightening by the US Federal Reserve.

Of course, there is an ambitious યોજના 1.5 trillion infrastructure plan to revive demand. But its success depends on the government monetizing હા 21 billion of its existing roads, railways, power and other assets to raise its resources.

The threat of a third wave of Corona epidemics has not yet been averted. Concerns are growing in Kerala over the transition to the Delta variant of the Covid-18, and there are fears that the easing of sanctions will not be heavy. Policy makers are not only alleviating the financial problems of families, they are also ignoring the detrimental consequences of India's long-term competitiveness. An economy that has been performing poorly for a long time suffers permanent losses. As technology and preferences change, it is imperative to stop production that fails to materialize in three or five years. Lost production and lost employment must be returned, it cannot be just the delivery of food or groceries, people must be provided certain employment on the spot.

Our first goal should be to eradicate the virus that is threatening our lives and livelihoods. Of course for real economic reform, we will need to do a real study of future challenges.

The late stimulus by the government, which will focus on infrastructure and can support overall demand, will probably get us out of the epidemic next year. But a prolonged slowdown in private investment will not sustain India's growth. The government must take effective measures for investment and job creation. Otherwise we may have to wait a long time to see a solid and strong 'V' shape economic recovery in the Indian economy.