By Akhil Kumar:
2012 was a year of global economic disasters with economic giants like the European Union and the USA struggling to balance the boat; it had adverse effects on the Indian economy too. The side effects of the Eurozone crisis will hinder a full economic recovery. After the numerous crises, scams and hounding inflation left the national economy in turmoil; it seems like the worst is over for now.
Though a lot will depend on the 2013-2014 budget and the degree of government’s desperation to announce populist steps in light of the upcoming elections, we can comfortably say that it will be a more or less balanced year as far as the economy is concerned. With the inflation finally stabilizing, tax reforms and interest rate cuts planned; the various industrial, automotive and real estate sectors are expected to give a much needed push to the economy through larger investments.
It was a turbulent year for Indian aviation as Kingfisher and Air India went through a lot of trouble and hence the government introduced FDI in the sector as a rescue, all eyes would be on this sector along with Cyrus Mistry as he replaces Ratan Tata in the $100 billion-plus house of Tata. With subsidy rollback and pre budget reform measures, the government is all geared up to accelerate growth and rejuvenate the economy. A major concern would be cuts in social sector spending as the administration seems to focus on rapid instead of sustainable and inclusive growth.
The manufacturing sector is also set to receive a boost as the government plans to increase manufacturing’s share in the GDP from the steady 15 percent. This move can help in creating new jobs and sustain growth only if implemented properly unlike past records. As a recent Planning Commission paper made it clear that it was time for serious policy initiatives for India to become a better place to set up new ventures, and create a strong and vibrant ecosystem for entrepreneurship; there is hope that the government would encourage startups and new initiatives to lure more investment. India Inc. would also be instrumental in economic changes as it further concentrates on mergers and acquisitions learning from the mistakes of the year gone by.
All the other things revolve around the budget that is to be announced in February by the Finance Minister, let us just hope Chidambaram does better than the last budget that had the government sweating it out to undo the damage done by it initially. The focus should be sustainable and inclusive growth, not populist or politically motivated steps that further hamper our economic growth in the long run.