Why India's Eight Core Industries are Declining?
Waking upto news like, ‘India’s eight core industries are declining’ is definitely alarming for all Indians. In fact, as per the official government data released on Monday, the eight core industries namely, coal, crude oil, natural gas, refinery products, fertiliser, steel, cement and electricity are declining at a rate of 0.5 percent in the output. Reports say that, the core sector growth has been slipped to a 52-month low. It is indicated that competitive pressures and challenging market conditions are the main hindrance. However, the orders from the US-China trade commissions have impacted the Indian export market which also contributed to a significant slower rate in the market. Accordingly, India will be borrowing a gross amount of 2.68 trillion rupees from the market between October and March via dated securities, as per the Economic Affairs Secretary Atanu Chakraborty.
Present Scenario at India’s Core Industries
The recent data reveals that the core industries of India recorded a negative growth with coal, crude oil, natural gas, cement and electricity marking a declining growth of 8.6 percent, 5.4 percent, 3.9 percent, 4.9 percent and 2.9 percent respectively. On the bright side, the only industries doing well are the fertiliser and steel production sectors, which saw a positive growth of 2.9 percent and 5 percent respectively, during the month of August.
Recently, India’s official GDP is questioned heavily with the economy going tremendously down, and low inflation rates are one of the many reasons for the slowdown. The inflation rate is believed to be at its lowest in two years, which simultaneously reflects the weak demand for both consumptions and investment goods.
Along with the introduction of demonetisation, the poor implementation of GST led to a whooping rise in unemployment, which made the wages flow directly into particular rich individuals without actually making into a better economic improvement. This indicates poor management from the government that has been witnessed in the last few years. Despite the recent poor downfall, even the consumption demand was negatively influenced, which correspondingly reduced the profit expectations of producers in the formal enterprises. In fact, the government hoped that the measures (to ease inflow of foreign capital) taken will turnaround the negative impulses. But the government’s easy going attitude aggravated as the lack of investments in the banking sectors rose with the high ratios of non-performing loans.
It is expected that the government will miss the fiscal deficit target for the year due to 1.45 trillion rupees of revenue loss in accordance with the cutting of corporate taxes, which will eventually hit the weak tax revenue collections. Thus, the government might have to borrow more than the budgeted amount to meet the expenditures.
Way Ahead for the Government
Several economists in the country believe that strong policy reforms can save the slowdown in the economy. A proper mix of policy decisions and demand dynamics can decide the outcome of India’s fortune to withstand the economic storm, which can be expected in future. However, the government is hoping to see a change in the tale as the festive season is approaching this month. During the festive season, the consumer demands increase rapidly, which gradually picks up the sales activities in the market. But, focusing on delivering the supply side without judging the demand creations is of no use as per the economists. Without reviving the small scale enterprises, it’s is difficult to deal with the current hold up in economy. Reviving them can bring-in tons of employment opportunities across various sectors as well impact the economy heavily.