It is the festival season when we look at the brighter side of life and celebrate. So, let me look at the positives for the economy and exporters.
By all accounts, rural India is doing better than a decade earlier and poverty has dropped significantly. This is likely to unleash a fresh wave of entrepreneurship that will bring in fresh talent and ideas in businesses - initially in small businesses. Eventually, some of the new entrepreneurs will emerge as significant wealth creators in their own right and contribute to growth, competition, employment and overall sense of wellbeing.
Some evidence of the quiet revolution in rural areas is already visible during travels, in terms of enhanced consumption and aspirations. I expect significant growth in the unorganised sector that will in due course play a momentous role in driving policies and processes, besides shaping attitudes and politics. I see this as a very positive development and given the churn at the ground level and hope and ambition of the youth in the country, the direction or the pace of change is unlikely to be reversed.
At the moment, exporters are breathing easy after reasonable weakening of the rupee to compensate somewhat for the rise in domestic costs. The past four months have seen exports rise at double-digit growth rates. This party can go on till the flipside of a weaker rupee, higher costs, catches up again but for the moment, we can revel in the hope that the revival of developed economies, however slow, will help sustain the export momentum and contribute to lowering the current account deficit to manageable levels. There could also be some comfort that the export basket has been widened, with incentives under the Vishesh Krishi Gram Udyog Yojana and Focus Product Scheme. And, that export destinations have also become more diverse with the Focus Market Scheme. The scheme to incentivise incremental exports should also encourage exporters.
There is no harm in dreaming that plentiful rain this year will help higher farm production that will moderate inflation and help bring down the interest rates. In turn, this could revive demand for goods and services to improve infrastructure and demand for consumer durables, low cost housing and so on. Incremental reforms, approvals for projects stuck since long, lifting the blanket ban on activities like mining, curbing wasteful expenditure, etc, should help the economy reverse the declining trend. Industrial production is more likely to grow at a better pace than in the past couple of years. The stock market is already celebrating.
The build up to the global trade talks scheduled at Bali, Indonesia, early next month suggest a ray of hope that these will result in a broad consensus on farm subsidies in rich countries, trade facilitation and development issues. Even if the talks succeed, their immediate impact might be negligible but success in any measure at Bali could pave the way for a more balanced multilateral trading regime a few years ahead.
In parts of our country, Diwali is a celebration of triumph of good over evil. In some other parts, it heralds the advent of a new year. Let us hope that in the coming year, good will triumph over evil in our society. With that faith and prayer, let me wish all readers Happy Diwali and a Prosperous New Year.
email: tncr@sify.com
