Some food for thought
"No matter how far a person can go the horizon is still way
beyond you."
—Zora Neale Hurston (American Dramatist, 1891-1960)
Word for the day
Labyrinthine (adj)
Complicated; tortuous
First thought this morning
By announcing 10% quota in central government jobs and
educational institutions for economically weaker section (EWS) of the Society,
the incumbent NDA government is seeking to create a storm in a buttermilk
glass.
Assuming that the measure does pass the judicial scrutiny and
becomes a law it would have little impact on ground in next one year or so,
given the inadequate job opportunities and limited number of seats available in
central universities and other higher education institutes.
It is inevitable that the State governments will follow the
steps and implement this quota in their respective states. Therefore, it would
be difficult for BJP and its allies to seek exclusive advantage of this
benevolence.
Moreover, since Congress has promptly agreed to support the
legislation, it would be entitled to claim the moral high ground, i.e.,
"if it is a matter of welfare of common people we rise above the partisan
politics". Whereas, all the negatives and execution challenges will accrue
to BJP alone!
For once, Shekhar Gupta is right when he says, "BJP
leadership is more nervous about the elections than we would’ve thought" (see here)
Chart of the day
Economic Growth - Stable but not accelerating
The advance estimates of FY19 GDP growth recently released by
CSO, confirm our view that the trajectory of economic growth in India shall
remain flat for next few years, and no material acceleration should be
anticipated.
Further, the advance estimates suggest that no material benefits
of GST, higher MSP, NPA resolution and capex in transportation sector (roads,
railways, ports, civil aviation) are seen accruing in 2HFY19, as anticipated
earlier.
I am accordingly lowering my growth estimates for FY20 and FY21
marginally by 30bps each. The long term trend growth (5yr CAGR) is seen stable
in 7.25%-7.3% in the next couple of years at least. This assumes normal monsoon
and no major acceleration in global trade and geopolitical conflicts.
Presently, the risks to growth estimates are on the downside.
According to the data released by the CSO:
- Growth in the farm sector is seen at 3.8 percent compared with 3.4 percent in the previous year.
- The mining sector is likely to grow at 0.8 percent against 2.9 percent.
- Manufacturing is seen growing at 8.3 percent versus 5.7 percent.
- The construction sector is expected to grow at 8.9 percent versus 5.7 percent.
- The trade, hotels and communication segment will grow at 6.9 percent versus 8 percent last year.
- The financing, real estate and insurance segment is seen growing at 6.8 percent compared with 6.6 percent.
- The government spending-linked public administration segment is expected to grow at 8.9 percent versus 10 percent.Per the trend suggested in advance estimates, the job conditions should improve as the labor intensive construction and manufacturing sectors are seen recording highest growth in three years.
However, the anticipated slowdown in consumption (both private
and public) could be a worrying sign, though not totally unanticipated.
Other key monitorables would be the fiscal deficit, both the
center and combined. A material violation of fiscal targets may see further
cuts in public spending in FY20 that may risk the growth further.
A change in political regime at center and/or some other BJP
ruled states in 2019-20, could potentially see a rise in fiscal profligacy.
This may further distort the growth estimates.
But for now, I continue to expect the present trend to continue
in FY20.
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