I really don't understand how the UPA government is hopeful of economic growth above 6.5 per cent next year. If one goes through the Economic Survey (2012/13) carefully, industrial production is at an all-time low of three per cent. Manufacturing sector growth - so far, in 2012/13 - is less than two per cent and capital goods production has been witnessing negative growth for two consecutive years.
The overall investment level has gone down by about two per cent and domestic savings by more than three per cent. Even on the agriculture front, while total food-grain production reached an all-time high of 259 million tonnes in 2011/12, the government has conceded that the output of all major crops will decline in 2012/13.
Given this scenario, I fail to understand how the government can say that the downturn "is more or less over". How will an economy struggling to grow at five per cent suddenly spurt next year?
There's more. The Economic Survey talks of withdrawal of subsidies. This will lead to a further increase in prices and the vicious cycle of lower income leading to less consumption and so forth.
(As told to Sebastian PT)