India's GDP train may have slowed down but has more gravy for job seekers

An Icra report suggests India's GDP growth may have slowed down to 7.2% in Q2 amid higher fuel prices and downbeat agri and industry, but on the brighter side EPFO data show a pick-up in job additions

A recent Icra report said India's gross domestic product (GDP) growth may have slowed down in the July-September quarter compared to the first quarter of the current financial year. It pegged GDP growth at 7.2 per cent for the second quarter, dragged down by lacklustre agriculture and industry.

 

Higher fuel prices and the weak rupee were pointed out as the primary factors dragging the industrial growth, while an uneven and sub-par monsoon, flooding in some areas amid a late withdrawal of the monsoon rains, and instances of crop damage and pest attacks hurt the farm sector.

 

The slippage may largely be due to the higher base effect of the second quarter of 2017-18, explains Indivjal Dhasmana.

 

However, all is not dismal in the Indian economy.

 

EPFO payroll data show that job additions in the formal sector have picked up and September saw the biggest jump in thirteen months.

 

The number of people effectively subscribing to Employees’ Provident Fund Organisation (EPFO), or for PF services, peaked in September 2018, with 973,774 net additions to the payroll count.

 

To add to that, the formal sector might be laying off fewer people — from a peak of more than a million subscribers leaving the EPFO in March, only about 250,000 exits were witnessed in September, writes Abhishek Waghmare.

 

This could be music to the ears of the Narendra Modi-led central government, even as it deals with a credit crunch and is engaged in a tussle with the Reserve Bank of India (RBI).

 

Under pressure from Prime Minister Narendra Modi's government to spur lending ahead of elections, the RBI agreed at its board meeting on Monday to extend a deadline for lenders to further lift capital conservation buffers by a year to March 31.

 

Relaxation in prompt corrective action (PCA) regulations, another bone of contention between the government and RBI, might not help revive credit growth, reports Shreepad S Aute. PCA banks have some restrictions in terms of lending and branch expansion, among other things.

 

A K Bhattacharya says the Centre could now focus on other matters after it has reached a truce with the central bank. Ahead of the government's 6th Budget in February next year, he wonders if Jaitley would continue his departure from past practices by presenting a full Budget with the usual tax proposals and expenditure outlays for 2019-20.