Editorial 1 : A Push for Growth
Context: GDP was lower than expected. Here’s how to move ahead.
Introduction: After a strong growth of 8.2% in 2023-24, followed by 6.7% in the first quarter of 2024-25, GDP growth has decelerated to 5.4% in the second quarter.
Poor Performance of Industrial Sector
- Growth has been pulled down mainly because of poor industrial sector performance, specifically mining, manufacturing and electricity segments.
- Industrial sector growth has decelerated to 3.6% in the second quarter, compared to 8.3% in the previous one.
- With a good kharif harvest, the recovery of the agriculture sector continued and the services sector maintained its momentum.
Consumption
- There is a moderation in consumption, investment and exports.
- Private consumption growth moderated to 6%, but remains relatively healthy compared to the 4% growth recorded in 2023-24.
- Rural Consumption: High frequency economic indicators like FMCG sales volume, two-wheeler sales have signalled improvement in rural consumption.
- Urban Consumption: Urban consumption seems to be moderating after the sharp jump seen post Covid.
Investment
- Government capex contracted sharply in the first quarter due to election related restrictions and has been slow to recover.
- Centre’s capex has fallen by 15% in the first half of this year, while the consolidated capex by state governments has fallen by 11% during this period.
- Investments by major central public sector enterprises also contracted by 11% in the first half, though there has been some improvement in the second quarter.
External Sector
- Growth in exports of goods and services has moderated.
- Exports have been relatively muted in the midst of low global economic growth and services sector exports have sustained their healthy growth momentum.
Future Expectations
- It is expected that GDP growth will pick up in the second half of the year.
- Consumption growth is likely to see some improvement in the coming quarters supported by healthy growth in agriculture production and rural demand.
- A likely moderation in food inflation in the coming months will support consumption.
- The developments in the job market and growth in household incomes would be a critical factor influencing consumption growth.
- Government capex is likely to pick up strongly in the second half.
- There are some positive signals coming from the order book of capital goods and road development companies.
- Overall GDP growth for this year is likely to be lower at around 6.5%.
What’s Required
- There is a need to give a boost to consumption and more importantly widen the consumption base, ensuring that all segments participate in India’s growth journey.
- There is a need for fresh triggers to boost consumer sentiments and household spending.
- A strong push to job creation could provide that trigger. This is especially critical when there are concerns around job creation due to automation.
- Providing some tax benefits to households to spur consumption should be on government’s mind.
- A spurt in domestic consumption will provide the required trigger for a sustained pick up in private capex.
- Donald Trump’s Presidency and the likely trade war makes it more critical for the government to strengthen domestic demand to ensure sustainable growth.
Editorial 2 : We don’t Breathe the Same Air
Context: The poor suffer more due to pollution and it’s time to address this issue.
Challenges in Addressing Environmental Problems
- Lack of Political Will: Politicians prioritise promises like infrastructure, jobs, and global prestige over environmental agendas like clean air, water and blue sky.
- Overreliance on market solutions such as air purifiers, private transport, remote working and learning.
- This bubble-living model, isolates individuals rather than addressing systemic issues.
- Absence of Universal Solutions
- Pollution infiltrates all layers of life, making individual insulation efforts insufficient.
- Unlike COVID-19, air pollution lacks a vaccine or quick fix.
Inequality in Pollution Burden
- Disproportionate Impact on the Poor
- Common sources of pollution, like stubble burning, garbage burning, and coal-fired stoves, are critical to the livelihoods of poor and marginalised.
- They also lack the financial means to shield themselves from pollution.
- Blame Game
- The affluent class conveniently shifts the blame onto farmers, construction workers, and other vulnerable groups without addressing the root causes.
- Bans on stubble burning or construction fail to consider the socio-economic consequences for farmers and daily-wage workers.
- Technology and Resource Divide: Remote work and online learning exacerbate inequalities as poor internet access and lack of devices hinder the education and employment prospects of lower-income groups.
Way Forward
- There is need of a national plan that touches each of us and that requires each of us to make a sacrifice.
- We cannot have an action plan that does not take into account the inequality in our society.
- The poor and the marginalised need to be incentivised with material resources, not punished.
- Learning from Global Arguments: As the Global South defends its right to development against developed nations, India must adopt similar ethical stances domestically.
- Ethical and Compassionate Governance: Policy-making must account for social and economic inequalities.
Conclusion
As we celebrate the 75th year of the Constitution, we must know that the time to act is now, as air pollution and other environmental issues know no social or economic boundaries, affecting all who share the same air and environment.