Senior Congress leader Jairam Ramesh has said that the overall political and social climate had taken a beating in the last couple of years, which was a cause for concern.
Speaking on the challenges facing the economy at the annual general meeting of the Southern India Chamber of Commerce and Industry, Mr. Ramesh said that the military parlance used during the World War II, “SNAFU” (Situation Normal, All Fouled Up), would be the apt way to describe the current state of the economy.
Mr. Ramesh said that the country’s GDP growth had been declining for six consecutive quarters.
He pointed out that demonetisation and the hasty roll out of the Goods and Services Taxes had a major impact on the GDP, coupled with the decline in exports. He said he expected the slowdown and challenges to continue in the short term with no signs for revival. India’s high exchange rate had affected one-third of the exports, mainly in labour intensive industries like textiles and leather.
Mr. Ramesh said that the environment was not conducive for investments as indicated by the recent data on gross capital formation (an indicator of private investments).
‘Lowest in 15 years’
The gross capital formation was now 28.5% of the GDP, the lowest in 15 years and the number was 34% of the GDP six years ago, a time when there was a so-called policy paralysis.
He also said that investments were not happening even though inflation was low, there was $400 billion of foreign exchange reserves and the government was having a clear majority in the Lower House and working majority in the Upper House (with the two AIADMK factions uniting).