After a lot of cheering for Narendra Modi, recently elected as a prime minister for a hoard of promises he made to the Indians, the new Government is facing difficult challenges almost every day. Given the already bad condition of the Indian economy, Mr Modi has to work a little extra hard to prove himself. So here is what I am guessing most of us want to ask him, “challenge accepted, Mr Modi?”
As is known already, India is facing a downturn in the GDP growth (Gross Domestic Product-GDP-is a measure of the value of goods and services produced in the country) For the first time since 1980’s, the GDP has grown at such low rates in 2013-14. The manufacturing sector is facing a downturn and services and agriculture are doing no good. Given the El Nino Effect,- a weather glitch marked by an abnormal warming of the eastern Pacific Ocean and is known to trigger weaker rains and droughts, could effect farm production in India there is little hope for the agricultural sector even in the future. Following the possibility of deficient monsoon and also because India lacks a very well developed irrigation system, agricultural productivity is expected to be hit, causing further inflation in food prices. So I guess we should all be prepared to hear our mothers bickering about the rising prices!!
As the Modi government was dealing with the issues of economic growth and Mr Modi was making trips abroad to strengthen India’s international relation, another unfortunate incident fell as a heavy burden on the new government’s shoulder. The Iraq tragedy (as I would call it). Only recently a Sunni terrorist organisation Islamic State of Iraq and Syria (ISIS) wrecked havoc by its takeover of the Iraqi towns, mainly Mosul and Tikrit over the last week. A lot of Indian workers have been abducted (around 40 workers, most;y from Punjab although one has recently managed to escape). The Ministry of External Affairs is assuring the kins of these unfortunate Indians but they are yet to be released from abduction. A new challenge thus remains to ensure the safety of the Indians who are caught up in the violence in Iraq.
Not only this, but also the oil prices are expected to rise following the disturbances in Syria. The wholesale price reached a five month high for May (at 6.01%), pulling up food and fuel prices. The Modi government that promised to bring the inflation down is surely taking it as a big challenge to keep up their promises given the odds are completely against them. Both El Nino weather conditions and the disruption in oil supply due to the Iraq tragedy could push up the prices further. Moreover, the new government also had in its manifesto a promise to bring about more jobs, which appears to be a difficult accomplishment for now. The Reserve Bank of India had indicated its willingness to cut the interest rates in order to spur the growth but if inflation is on a rise, such hopes could recede. The rising oil prices could once again depreciate the Indian rupee making dollar more expensive. The budget deficit of the government could increase, and hence any proposals to cut taxes in the future could backfire.
The list of problems is perhaps even longer than what I have spelled out. Had I been the government, I would have already lost sleep over these potential monsters haunting my ambitions of a better economy.
However, if Modi is really the “superman” people claim him to be, he will perhaps pull the country out of the swamp of problems. The wait is to see how well he tackles these issues. Before I wind up, I would request all my readers to do their bit by being a less generous in using oil and by not wasting food at all.