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Pinched pockets

Taking into consideration numbers put out by a host of financial institutions, however, it may be fair to calculate that growth may well have dropped to six per cent or less.

Pinched pockets

The richest 10 per cent Indians own more than three-fourths of the wealth in India. (Representational Image: iStock)

Of the two significant events scheduled for this week, the one less advertised should be of critical import to Modi 2.0.

Thursday’s much-talked about swearing-in of the new Modi government will be followed, a day later, by the announcement of provisional growth estimates for financial year 2019. Truth to tell, based on the choreographed data, which has been the salient feature of the past half a decade, no one can quite project growth numbers with any degree of certainty.

Taking into consideration numbers put out by a host of financial institutions, however, it may be fair to calculate that growth may well have dropped to six per cent or less. While growth numbers are not the ultimate measure of India’s development, they must be read along with the severe disparities in India’s growth to appreciate their true impact.

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The richest 10 per cent Indians own more than three-fourths of the wealth in India but the more critical figure is that there are 269 million poor Indians and the number of the chronically poor is estimated at around 111 million. Given that their condition had been worsening over the past five years with tragic consequences for many and that did not seem to have any impact on their electoral choice, there would be little incentive for the government to reconsider its economic strategy.

Any change in such strategy would only be occasioned by the wealthy insisting that the fortune at the bottom of the pyramid not be lost courtesy the economic route that the country has been taking. Eventually, the neglected grassroots comes back to bite the purveyors of products and services. There is no disagreement from anyone that India’s consumer economy and the global economy that it interacts with is sluggish.

The former shows itself across product categories, including the slowing demand for several food categories in rural areas at one end to a worrisome drop in automotive buyers across the country. The signals from the international sector are worrying too, beginning with geopolitical developments ~ the China-America trade hostilities, for instance ~ that impact the domestic economy to the widening trade deficit (as a percentage of total trade).

This is thanks to a northward bound import bill, egged on by higher crude prices with zero buoyancy in exports to serve as a mitigating factor. Projections of a global slowdown make achieving higher exports that much more difficult. Domestically there is the spectre of burgeoning public debt and the only seeming solace comes from the apparently healthy bank credit growth.

Even this must be assessed in the light of dried up liquidity in the non-banking financial company space. It is fair to deduce that it is the borrower from here who is going to the banks. The economic pocket pinch is pan India and any further manipulation of data will only convert the pinch to a squeeze.

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