The bottom watchers are back in business. The economy is said to have grown by 4.8% in the second quarter of the current financial year, after growing by 4.4% in the first quarter, the lowest in 4 years. So, the economy must have bottomed out. Agriculture grew by 4.6% due to fantastic monsoons and manufacturing grew by 3.2%. However, growth in manufacturing has been -0.1% between April and September. Unnamed sources were unimpressed. " How is revival possible when the jobs-creating sector is flat," said one. " The agriculture growth achieved in the first half of 2013-14 is just about long term average. It is hard to be excited about data released today." Our most revered Finance Minister is having none of this. " I am absolutely confident that we can overcome this period of stress and return to high growth path. In 2014-15, our growth will be close to 6%. In 2015-16, it will be close to 7% and a year after we will be back to high growth rate of 8%," he said. The Congress has increased taxes to unbearable levels and invented new ones but very cleverly it has not levied a tax on hot air. Being a lawyer by trade he is extremely slick with words. What does " close to " mean? Is 5 close to 6, or 4 or 2? He is setting a high bar for the next government while leaving it with a huge fiscal deficit by rolling over $15 billion of expenditure to the next financial year.
Cunning or what? Trouble is when you spend on unproductive social schemes while cutting expenditure on vital infrastructure inflation rises, tax receipts fall due to falling domestic consumption and growth dives. Increasing taxes only reduces demand further. The result is runaway fiscal deficit. The government has achieved 84.4% of its target deficit for this fiscal between April and October, that is in just 7 months. Tax receipts were just Rs 3.6 trillion while total expenditure was Rs 9.2 trillion and deficit Rs 4.57 trillion. But there is also the Current Account Deficit. By reducing gold imports through high taxes and increased exports due to the weak rupee CAD is expected to fall to below 4% this year. When premium petrol was first introduced it was Rs 3 more expensive than ordinary petrol but huge taxes increased the difference to Rs 10 so motorists stopped using it. The government has realised that premium petrol increases mileage and cuts consumption of oil so now they are thinking of reducing excise duty by Rs 5. The Congress has destroyed the economy and is frantically looking for excuses. Sadly there are none.
Cunning or what? Trouble is when you spend on unproductive social schemes while cutting expenditure on vital infrastructure inflation rises, tax receipts fall due to falling domestic consumption and growth dives. Increasing taxes only reduces demand further. The result is runaway fiscal deficit. The government has achieved 84.4% of its target deficit for this fiscal between April and October, that is in just 7 months. Tax receipts were just Rs 3.6 trillion while total expenditure was Rs 9.2 trillion and deficit Rs 4.57 trillion. But there is also the Current Account Deficit. By reducing gold imports through high taxes and increased exports due to the weak rupee CAD is expected to fall to below 4% this year. When premium petrol was first introduced it was Rs 3 more expensive than ordinary petrol but huge taxes increased the difference to Rs 10 so motorists stopped using it. The government has realised that premium petrol increases mileage and cuts consumption of oil so now they are thinking of reducing excise duty by Rs 5. The Congress has destroyed the economy and is frantically looking for excuses. Sadly there are none.
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