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As the year 2005 comes to a close, there are raging reviews of the Indian economy-How the GDP growth is sustaining at eight per cent and how the Sensex is creating happy waves in the North Block, the seat of Finance Minister P. Chidambaram. The Finance Minister would be a happy man because he has a lot of statistics to show even as there is a talk about shifting him to the Home Ministry! One wonders whether Chidambaram'sshift to the Home Ministry would be a reward for him or whether it would be just kicking him upstairs! The problem with the number-crunchers is that they take a narrow view of the state of the economy. Things like the Sensex trading above the 9000 mark and almost touching the 10,000 mark and pouring in of 10 billion dollars into the second or third fastest growing economies by the FIIs are reeled out to paint a rosy picture. Nobody would like to take away the credit from the government, which must also take a look at some other numbers as well. You cannot do cherry-picking and go on bragging about achieving things as if they were impossible without this government being there. Take for instance, the export figures. The growth rate remained above 20 per cent giving Commerce and Industry Minister Kamal Nath a handle which he kept holding even in Hong Kong where he went for the WTO Ministerial Meeting in the second week of December. But when the November figures were released immediately after his return from his ?victorious? negotiations at the WTO meet, he should have lost some of the enthusiasm. As against a growth over 22 per cent till October, the November performance slipped into negative. The growth of exports slipped in November 2005 due to poor sectoral performance in textiles, clothing, gems and jewellery and even engineering goods. Exports during November 2005 are valued at 6.16 billion dollars, which are 11.38 per cent lower than the level of 6.96 billion dollars in the same month last year.
Imports in November 2005, on the other hand, represented an increase of 8.68 per cent at 9.9 billion dollars as compared to 9.11 billion dollars in the same month, last year.
The problem with the number-crunchers is that they take a narrow view of the state of the economy. Things like the Sensex trading above the 9000 mark and almost touching the 10,000 mark and pouring in of 10 billion dollars into the second or third fastest growing economies by the FIIs are reeled out to paint a rosy picture.
The trade deficit during April-November 2005 widened to as much as 27.64 billion dollars as compared to 16.34 billion dollars during the same period last year. The poor November performance left a dent on the overall exports for the first eight months of the fiscal year 2005. For the April-November period of 2005 as a whole, exports went up by 16.07 per cent to 57.05 billion dollars from 49.15 billion dollars in the same period last year. This is just above the target and the difficult months are still ahead. One thing is sure! Kamal Nath'sambition of 100 billion dollars exports remains a far cry. The imports, on the other hand, would continue to create the imbalance since oil imports have become a major drain on the economy. Whoever says that rising bill on the country'soil imports is not a worrisome thing is fooling around the state of the economy. Imports for April-November went up to 84.70 billion dollars representing an increase of 29.32 per cent over 65.49 billion dollars. But oil imports for this period are valued at 27.76 billion dollars, up 43.46 per cent.
While the Finance Minister brags about the manufacturing sector growth moving towards the double-digit mark, the six core infrastructure industries registered a lower growth of 4.6 per cent during April-October, 2005 as compared to 6.8 per cent in corresponding period last year. These core industries include steel, electricity, crude, cement and coal which can leave a bad rub-off on a whole range of industries as also the entire range of infrastructure projects. The agriculture remains an area of concern. According to the Centre for Monitoring Indian Economy, the foodgrain production in Khariff 2005 would be 106.3 million tonnes which is just 2.9 per cent higher than 103.3 million tonnes produced in the previous Khariff season. The estimates for the Rabi 2005-06 are 102.2 million tonnes as compared with 101.2 million tonnes in the previous season. It is just about a flat growth rate in production of foodgrains. No wonder, many international surveys predict that India could again become a net food importing country by 2010 from a net food exporting country. The entire concept of food security does not really bother this government which is so happy about the Sensex and the hot money coming from the unreliable FIIs who fly by night leaving the Finance Minister alone. Thus, while the year 2005 was good for the stock market, it threw many challenges for the vital segments like agriculture, exports and the infrastructure industries. The government has to take some lessons for the new year.
