Should we drink a toast to our GDP growth rate of 8.2%?

India's GDP grew by 8.2% in the first quarter of this financial year, 1 March-30 June. The growth is calculated by comparing with prices in the same period last year and shows a jump in agriculture, manufacturing and construction. Mining and services did not grow despite a jump in taxes on services, which increased from 12.36% in 2014 to over 15-18% in this year's budget. Since GDP is calculated by adding taxes, but subtracting subsidies, it would be expected to rise if taxes go up. Both private consumption demand and demand for investment rose but revenue deficit has crossed full year target in 4 months. Experts were optimistic about the economy going forward but cautioned against the inflationary effects of a weaker rupee. That would encourage the Reserve Bank, RBI, to increase the cost of borrowing which will impact new investment. Several experts warned of dangers to our economy. Higher trade deficit, which increased to $63 billion between April and July compared to $51.5 billion last year,, with high price of crude oil is a worry, said R Gopalan. S Bhattacharya is worried about the government's inability to contain both fiscal and current account deficits while J Bhagwati thinks that the rupee is overvalued by 25%. If the rupee falls by another 25% it will go to 90 to the dollar which will cause prices of imports, especially oil, to jump and play havoc with government finances. To finance its excessive spending the government has increased customs duty on over 400 imports in the last 2 years. This government has reverted back to 'import substitution' policies which "threatens to return us from the turnpike on which we have been travelling all these years on to the dirt road," wrote Prof A Panagariya, who used to be CEO of Niti Aayog. To add to our problems the US has complained to the WTO about subsidies provided to Indian exports. The US need not worry. Our exporters are not getting their subsidies because of delays in refund of input tax credit which are charged upfront under GST rules. The weak rupee "reflects an economy that is consuming more than it produces. It reflects an uncompetitive economy for it makes more sense to import than to buy domestically produced goods or that domestic production of some goods does not happen, or it is a combination of all these," wrote VA Nageswaran. In the absence of reliable jobs data, the number of people applying for low salaried vacancies point to jobless growth, wrote Nag and Beniwal. When 3,700 with PhD degrees apply for jobs as peons it shows the lack of job opportunities and, sadly, how worthless our degrees are. Time for a Patiala peg? Not yet perhaps.