Indian government faces tough questions as Economic Growth Numbers Remain Low
Indian government is facing tough questions as the economic growth has slowed down to the lowest levels in past few years. Narendra Modi government inherited banking crisis from the previous government but steps taken by Modi government weren’t enough to help the ailing public sector banks. As banks were facing tough times, the lending remained subdued, leading to more distress in many sectors.
For the past few years, real estate sector in major Indian cities has faced decline, mainly due to low demand from end users. The investing community has remained on the sidelines, waiting for conditions to improve for real estate sector. While the sector was undergoing tough times, real estate developers started defaulting on payments and also faced major delays in completion of projects. In all major cities, there is at least one big real estate project which has suffered major lapses in terms of timely delivery of apartments to homebuyers.
Automobile sector started facing troubles during the last few quarters and this sector has major impact on many other sectors and overall economy. Even the biggest names in automobile sector have reported dismal sales data over last two quarters. While economists can argue about the growth this sector has witnessed over years, the fact is that the current situation is tense.
Other sectors like textile, clothing and leather are also facing economic issues. As real estate growth has stalled, cement companies and other related segments are also witnessing decline in demand.
Modi government has to be proactive in dealing with the crisis which is imminent. The finance minister was quick to announce some measures last week. However, it will be better to take concrete steps instead of just talking about what the government plans to do.
Ex-Prime Minister Manmohan Singh criticized Modi government for failing to deal with the current economic issues. He blamed it on currency demonetization and unplanned implementation of GST.
The reasons for economic slowdown can be many but the solution lies with the government. The banking sector needs the support from government and corporate sector need help as well. Government has to make the country competitive in terms of export. The local consumption story remains but people should have more money to spend in order to buy goods manufactured by Indian companies.