Bite sees spectre of a slowdown

Last fortnight, when the Board of India Today Economists (BITE) met for a brainstorming session on the Indian economy and its general direction, there was broad consensus that a slowdown seemed to be developing, though the board members were divided on the nomenclature— a definitive slowdown or an anticipated soft-landing? But regardless of the language, the Board expected economic growth to moderate to 8.5 per cent from 9.4 per cent.

There has been a drop in domestic retail consumption in areas such as automobiles, real estate and consumer durables in response to hardening of interest rates over nearly three years; and the rising rupee has hit exports hard. The Board was unanimous that a stronger rupee is definitely a liability. AV Birla Group’s Chief Economist Ajit Ranade pointed out that domestic industry will not be immune to the impact of currency appreciation as imports become more attractive. “If the US economy really slows down significantly, India may be hurt less than China but it will be hurt,” said Shankar Acharya, member ICRIER.

Solutions? All the usual stuff prescribed by BITE for over five years now—spur growth in agriculture, improve infrastructure, particularly power, overhaul the labour market and the education sector and increase investments in public health.