With the Congress stalling business in the Rajya Sabha over the tiol Herald case and now raking up the Vyapam and Lalit Modi controversies again, the ongoing parliamentary session is likely headed for yet another total washout. The NDA government may bemoan the loss of this session to pass the Goods and Services Tax (GST), land and other key legislations, but little can be done when obstructionist politics takes precedence over governce. There has been some moderately good news on the economy front which experts believe can be leveraged if the general budget is implemented effectively and regulations simplified. The country’s GDP grew 7.4 percent in July-September last, better than 7 percent growth clocked in the April-June quarter. There has been an upturn in investment by 6.8 percent, manufacturing grew at 9.3 percent while agriculture maged to grow at 2.2 percent despite two successive years of deficient rains. The stagncy in farm wages has hurt rural demand and consumption. The expectation is that if the proposed pay hike of government employees is accepted, consumption expenditure will get another fillip. However, the pay hike proposal will entail an additiol burden of Rs 1,02,100 crore in 2016-2017, which will be 0.65 percent of the GDP. It is expected to push up the fiscal deficit to 4.7 percent of the GDP, which will be tricky because the government has already targeted bringing it down to 3 percent by 2017-18. There has been a consistent effort by the Central government to push budget spending by boosting investment in infrastructure. But government spending is expected to be hit by fiscal constraints, even though the fiscal deficit is presently comfortable at 74 percent of the budget estimate. If this roadblock is reached, it could hurt the economy in the next six months if private investment does not pick up by then. The Reserve Bank has also cautiously kept its overall growth projection for 2015-16 at 7.4 percent, with inflation on target at 6 percent in January next. As far as imports are concerned, the biggest relief has been the low cost of oil keeping the trade deficit low. But exports also shrank by 17.5 percent in October, maintaining its downward movement for the last eleven months. If the GST bill is passed, it is estimated to add as much as 2 percent to the country’s GDP. But that would take at least two years as the states say goodbye to octroi and check-gates to usher in a common, countrywide tax — by which time the next general elections will be looming large. There is therefore a strong likelihood that opposition parties like the Congress will stall such a legislation, despite professing loud support for it.
Politics over economy