Jayantilal Bhandari
To meet the challenges of the economy, it is necessary to have higher exports, increase domestic demand, good performance of manufacturing and services sectors, increase in agricultural production, and a good monsoon and the government’s supportive policy towards rural India. Only then will the growth rate of the country touch the heights.
According to the Gross Domestic Product (GDP) data that came recently, the growth rate of India’s economy is estimated to be 8.7 percent in the year 2021-22. It is a matter of comfort because India’s growth rate has been satisfactory as compared to other countries. But on the other hand, the slowdown in sectors like mining, manufacturing, trade, transport is a matter of concern. At present, the biggest challenge of the economy is rising inflation. At the same time, the trade deficit which was one hundred and ninety two billion dollars in the last financial year, may increase sharply to the level of two hundred and fifty billion dollars in the current financial year 2022-23.
It is clear from the data that it is not easy to increase the growth rate to eight-nine per cent in the current financial year 2022-23 amidst the scenario of global recession, like the previous financial year. In such a situation, the focus will have to be on increasing exports and foreign direct investment (FDI), increasing government capital expenditure with private use, strong growth of the agriculture sector, more production of food grains and controlling the foreign trade deficit. Significantly, in the current financial year, more efforts will have to be made to increase FDI and exports.
Also that the product exports in 2021-22 have also exceeded the target by more than four hundred and nineteen billion dollars. It is no small matter that there was a record increase in FDI in India in 2021-22 amid the challenges of a global recession. According to the data of the Ministry of Commerce and Industry, FDI of $ 83.57 billion came in India in 2021-22, while FDI of $ 81.97 billion came in 2020-21. India is the fastest growing country among the G-20 countries and has the highest ever capital investment in the country.
At present the world is also grappling with the food crisis. In such a situation, more efforts are needed for agricultural development and increasing food production in the country. According to the GDP figures, the growth rate of the agriculture sector has been three percent. Along with record foodgrain production, non-cropping sectors such as horticulture, floriculture and animal husbandry have also contributed significantly to this strong growth rate. According to the recent advance estimates of the Ministry of Agriculture, the total food grain production in the country in the crop year 2021-22 will be 314.5 million tonnes, which is 37.7 lakh tonnes more than the previous year.
Certainly, the agricultural growth rate has increased due to commendable efforts in the field of agricultural development in the country. In the last few years, about six times increase in agriculture budget, new agriculture industries, use of drones in agriculture sector, agricultural research and use of modern techniques in farming have brought a lot of improvement in the condition of agriculture and farmers. In such a situation, the food crisis in the country has also been overcome. There is no doubt that due to the continuous record foodgrain production in the country, India is now being highlighted as a country with potential for new global food grains all over the world. In such a situation, more strategic efforts will have to be made for abundant food production.
It is no small matter that India’s trade with major countries of the world is increasing even in the midst of the COVID-19 and Ukraine crisis. But at the same time the trade deficit remains a challenge. Therefore, now the emphasis should be on efforts to reduce the trade deficit. It is worth mentioning in this context that last month at the second summit of the Quad, a strategic forum of the US, India, Japan and Australia, the four countries have concocted the coordinated power and have promised to invest more than 50 billion dollars on infrastructure, It can prove to be a milestone in the development of India’s industry and business.
Apart from this, India’s trade relations with G-7 and G-20 countries in recent years and economic agreements with European countries in the same year will increase India’s foreign trade. It is also important to note that India has materialized Free Trade Agreements (FTAs) with UAE and Australia in a very short span of time. Progressive talks are now in progress for FTAs with the European Union, the UK, Canada, the six Gulf Cooperation Council (GCC) countries, South Africa, the US and Israel.
Now foreign trade will have to be increased in such a way that the deficit can be reduced. Last month, the government held a special meeting with representatives of industries regarding ways to boost domestic production under the Self-Reliant India programme. In this meeting, such priority products were identified, whose imports have increased in the last few months. These products include electrical appliances, metals, chemicals, petroleum products, precious stones, batteries, plastics and textiles. These are products whose production can be promoted to reduce imports and increase exports.
Apart from this, to reduce the increasing trade deficit, the trade deficit with China can be reduced by increasing domestic production of key products. For the last six-seven years, the government has taken several steps to reduce the trade deficit with China. These include efforts like banning various Chinese apps including Tiktok, control on import of Chinese goods, duty hike on many Chinese products, trend in government departments to use local products as much as possible instead of Chinese products. It is necessary to reduce the trade deficit by taking forward the self-reliant India campaign rapidly with domestic production growth and promotion of local industries.
It should also be noted that many industries in the country, such as pharmaceutical industry, mobile industry, medical device industry, vehicle industry and power tools, are still largely based on imported raw materials from China. In such a situation, in the last one and a half year, the government ensured incentives with allocation of about two lakh crore rupees to thirteen industries under the Production Linked Incentive (PLI) scheme to create an alternative to China’s raw materials. Although some of the country’s producers have been successful in making substitutes for China’s raw materials, there remains a need to reduce imports from China and other countries with additional efforts in these areas.
To deal with the challenges of the economy, there is a need to make self-reliant India campaign and Make in India successful. The pace of digitization of the economy has to be accelerated. In order to meet the challenges of the economy in the current situation, it is necessary to have more exports, increase domestic demand, good performance of manufacturing and services sector, increase in agricultural production and good monsoon and the government’s supportive policy towards rural India. Only then will the growth rate of the country touch the heights. It should be expected that in the current financial year, the government will do everything possible to increase the share of private investment in the economy and control inflation, and every effort will be made to solve the challenges of industry, business, agriculture and service sector.