Manufacturing sector in the country is in the grip of a slowdown. Key industries have registered lower growth in recent months. The overall industrial growth declined to 1.7 per cent in January, 2019. It was 2.06 per cent in December and 0.3 per cent in November last year. Production in twelve of the 23 industrial segments was on decline. Textiles, motor vehicles, leather and allied products, rubber and plastic products, etc recorded lower production. Capital goods, an indicator of business confidence, too contracted.
The latest numbers are provisional, subject to revision afterwards. However, these paint a none-too-happy picture of the industrial sector which remains key to job-creation. With the real estate sector still to recover from the regulatory clamps meant to discipline its wayward behavior and haphazard growth, the employment scene will take time to pick up.
The forthcoming election is further likely to slow down business decisions for growth and investment. Even though the nation-wide elections will inject a lot of money into the economy providing boost to poll-related production and jobs, what follows the elections would hold the key to further direction of the economy. Several sectors require structural changes to get back on the growth path.
For instance, even though consumer price inflation registered a four month high of 2.57 per cent in February, farmers still were denied equitable prices for their produce. Thus, vegetables, fruits and pulses registered negative rates of inflation in the latest survey. This may be good for the consumers but for the farmers it was a cause of concern, who in any case get in hand a small fraction of the retail price at which the farm produce is sold.
Even the overall economic growth has been contracting. In the quarter ending December 2018 GDP grew at 6.6 per cent. The overall growth for 2018-19 is unlikely to be much above seven per cent. The government might blame the legacy issues such as a mountain of bad bank loans and over-capacities in key sectors such as real estate and even power, but after five years the economy should have been back on rails for it to be able to grow at a decent seven-plus percentage.
Unfortunately, the global economy now shows signs of a slowdown while the crude oil prices are moving upwards. This could be worrying for the bounce-back of the Indian economy. In this scenario, after elections it is important to have a stable government led by a known and experienced leader who can steer the economy on the growth path. Urgent steps will be required to boost overall economic growth once the electoral business is behind us.