This refers to “GDP growth slips to 4.5%” (November 30). That the country's GDP growth is at a 26-quarter low and eight core sectors including manufacturing, construction and mining have contracted by 8 per cent is a matter of serious concern. It is a clear indication that the measures unleashed by the Union government have not yielded any result on the ground. While the growth in the second quarter is largely driven by government spending, the prospect of government persisting with its higher spending remains low in the backdrop of a fall in its revenues. If the government decides to stick to its fiscal deficit target, it would further intensify the slowdown.
Given the present circumstances, the monetary policy committee (MPC) might continue with its accommodative stance and cut the interest rates further. While sector-specific interventions can alleviate some pain in the core sectors of the economy, what is imperative at present is concrete steps towards addressing structural issues plaguing the economy. That holds the key to arresting the slowdown.
M Jeyaram, Tamil Nadu
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