18  THE ECONOMIC TIMES The Edit Page THE ECONOMIC TIMES | NEW DELHI / GURGAON | FRIDAY | 1 DECEMBER 2017

Growth Resumes, The latest GDP figure of 6.3% is a definite uptick. But we’re still in the thick of a slowdown

If on a Tepid Note
Case for stepping up public investment remains
Gross domestic product (GDP) numbers for the second,
Coming Up on the Downside shown some verve, measuring 4.6%
growth compared to 1.6% in the pre-
July-September, quarter of 2017-18 show that growth has vious quarter.
probably bottomed out and that the economy is on a path
of revival — not of a torrid kind, however. Q2 growth of
However, private consumption gr-
owth, which has been the key struct- Cause, Effect
ure that has been supporting growth
GDP at 6.3% is definitely better than 5.7% in Q1, but grow-
th in the first half now stands at 6%. While world growth
so far, is in a troubled place. In cur-
rent price, its growth looks strong at
of Rebirth
9.7%. However, in real terms — that
is consolidating, boosting exports, it would be surprising Aurodeep is, at 2011-12 prices — there has been a
SWAMI PARTHASARATHY
if growth in the second half is robust enough to yield a fall to 6.6% from 7% in the last quar- Some believe that when a per-
7% growth for the year as a whole. The Reserve Bank’s es- he GDP figures released on ter. This suggests that people’s con- son dies, nothing remains —
timate of 6.7%, if achieved, should not disappoint. Gross
fixed capital formation, as a proportion of GDP in cur-
rent prices, has slipped below 27% for the first half of the T Thursday for the July-Sep- sumption growth is falling, while
tember 2017 quarter is an prices of these goods are rising.
important data point, prim- It doesn’t help that the governme-
arily because it was meant nt is too fiscally hamstrung to suppo-
that death is the end of person-
ality. Others believe in the con-
tinuity of life. That the present
incarnation is only a link in the

current fiscal, full 11percentage points below India’s his-
toric peak in 2007-08. Without this figure picking up,
growth cannot regain sustained vigour.
The Central Statistics Office’s figures offer an insight
into how GST collections have impacted the economy.
The difference between GDP and the gross value added
(GVA) represents the commodity tax
burden on the economy, net of subsi-
dies. Assuming that subsidies have
grown as fast as GDP, the difference in
the tax burden in Q2 this year, as com-
pared to Q2 last fiscal, would be on ac-
count of the new goods and services
tax, which is meant to widen the tax
base, while lowering the composite tax burden, includ-
ing taxes on production, transport, storage and multiple
levels of distribution, on individual goods and services.
The net commodity tax component of GDP has gone up
from 8.82% to 9.49%. This validates the proposition that
GST raises overall tax revenue, even as the tax incidence
on individual goods and services comes down, by redu-
cing tax evasion. GST would only improve.
The policy imperatives are on the lines on which the go-
vernment is already moving: stepped-up public invest-
ment in infrastructure and recapitalisation of banks to
help them resolve bad loans and resume lending. Resolu-
tion of bankruptcies, especially of smaller companies,
can either give growth a shot in the arm or depress it fur-
ther, depending on how it is done.
FILE PHOTO
to be a bellwether of whether India rt growth with its own consumption, chain of one’s entire life. Yet,
has finally escaped the gloom of the and has already spent most of what it others posit the existence of
goods and services tax (GST) and de- had earmarked for spending. Gover- imaginary realms of heaven
monetisation-fuelled slowdown. To nment consumption growth has fal- It says 6.3% but we’re still not out of the woods yet and hell where they believe hu-
that extent, it hasn’t disappointed. len from over 17% in the last quarter mans go after their death. The
At 6.3% year-on-year, it inches abo- to around 4% presently. fact, masks a spectacular fall in quar- Meanwhile, India has been strugg- se beliefs are not based on rati-
ve the three-year low of 5.7% in the On cue, the services sector, which terly GDP figures since the last year- ling to capitalise on strong global gr- onal analysis and derivations.
previous quarter. The previous quar- has been one of the brighter spots, has and-a-half, from 9% levels to around owth by increasing its exports. Rat- What happens when a person
ter had seen GST-related inventory disappointed. Comprising roughly 6% presently. her tellingly, export as a percentage dies? His gross body perishes
destocking writ large in sharply slo- 65% of GDP (including construc- The answer is oil. End-2014 and of GDP has fallen to 19%, a level last in that form. The material of
wing industrial, particularly manu- tion),it has slowed down to 6.6% from much of 2015 saw a tumultuous crash seen back in 2005, when India was the body merges with earth.
facturing, growth. Investment grow- nearly 8% in the previous quarter. of global crude oil prices. Oil affects supposedly a far less mature export- The law of indestructibility of
th grew by a whimpering 1.6%, while Does all of this still mean we are the Indian economy in a number of ing nation. matter, the law of conservation
more worryingly, private consump- out of the woods yet? Or, more releva- ways. It affects the level of inflation, On the flip side, India’s import gro- of energy says it will not disap-
tion, that has been the sole dynamo of ntly, what woods are we talking abo- household incomes, bottomline of fi- wth remains stubbornly strong des- pear altogether. The same law
India’s growth engine, registered yet ut? Probably yes, if the conversation rms and government finances, both pite the economic slowdown, defeat- should be applied to the subtle
another quarter of slowdown. is about demonetisation and GST, on the side of public revenues (taxes ing the correlation that dictates that body as well that comprises his
although aftershocks of these policy on fuel products), as well as public fall in growth discourages citizens thought, feeling and desire. You
Services on a High earthquakes are likely to be felt ac- spending (through fuel and fertiliser from importing goods from the rest of would realise that its energy
In all of this doom and gloom, servi- ross the year. And probably no, if we subsidies). the world. Prima facie, it may suggest cannot vanish into nothing at
ces growth remained surprisingly were to consider a slightly longer ti- an element of import substitution in the time of death.
resilient at near 9% levels, driven by me frame. Welcome Rehab for Banks the economy, wherein domestic sup- Life is a series of experiences.
trade, hotel and financial services. Average GDP growth over the past The crash in oil prices led to a bonan- ply chains are facing disruptions. The progression of life is det-
The latest GDP statistic is reassur- couple of years — FY 2015-2017 — has za windfall, shared by all these acto- Worryingly, all these factors still ermined by desires that drive
ing in parts. Manufacturing growth been over 7.5%, a jump from less rs. Strong private consumption, sup- very much loom on the horizon. Add you from one experience to
has predictably — and fortunately — than 6% growth averaged between ported by the government’s welcome to this, the fact that oil prices have al- another. In philosophic terms,
revived to 7% from 1.2%, indicating 2013 and 2014. Whatever caused this increase in the quality of fiscal spen- ready started escalating, and private an experience is dead and ano-
that some of the GST blues have eb- sharp reversal in GDP trend since ding to favour public investment, led consumption is slowing. With the ra- ther is born, every moment.
bed, and the process of ‘remonetisa- 2015? And what implications does it to an overall rise in GDP growth. pid departure of a decade-long loose Your desires drive you throu-
tion’ is underway. have for the economic outlook going Meanwhile, little of the rest im- monetary policy globally that was gh a continuous procession of
Interestingly, it comes despite the forward? The question is particular- proved. Companies and banks conti- keeping foreign investors addicted birth and death. This will con-
high base of 7.7% in the previous ye- ly germane, given that the 7.5% aver- nue to be laden with bad debt, restrai- to emerging markets like ours, econ- tinue in perpetuity until all
ar. Private investment growth has age growth in the last three years, in ning vital corporate performance in- omists are already predicting curre- desires are eradicated from
dicators from performing well. Exce- nt account deficit to more than doub- your personality.
ss capacity continues to plague most le by next year. Desires are the cause and the
sectors. To that extent, the massive So, yes, 6.3% is a definite uptick. experiences of life are the ef-
Import growth remains strong despite the slowdown, recapitalisation package for public But as Batman is warned by Catwo- fect. Unfulfilled desires have
defeating the correlation that fall in economic growth sector banks (PSBs) recently annou- man in Christopher Nolan’s The Dark to be eradicated to prevent fur-
nced will ameliorate the unfortunate Knight Rises, ‘There’s a storm com- ther manifestation. The cause
discourages citizens from importing goods tragedy of balance sheets. ing, Mr Wayne.’ has to be removed to erase the
effect. When desires are com-
pletely exhausted, the cycle of
birth and death ends. That is

Google, Apple Should TAKE FIVE the state of self-realisation or

God-realisation.
Old-Age Pensions AAKAR PATEL

Design New Cities Countries such as China, Japan, Maldives, Mongolia and New Zealand
provide universal coverage for old-age pensions. Others like Australia, Hong
Kong, South Korea and Thailand have coverage levels above 70%. On the
other hand, in countries such as Bhutan, Cambodia, Lao PDR and Pakistan,
Top 5 Matters About
Something That Matters This Week
PRICE NAMO HAS NOT PAID
Chat Room
Time was when great architects designed some of the most be- FOR HIS STEPS AS PM
effective coverage remains below 6%…
autiful cities or urban spaces. Edwin Lutyens designed the
“The problem
New Zealand
Maldives China Italy Japan 1 Standing in line to exchange his money Bad Appraisals
Pensionable-age population receiving pension 2010-16 (%)

100
eponymous Lutyens’ Delhi. Le Corbusier designed Chandi-
garh. Modern Paris owes everything to Georges Haussmann, with beauty is 90 Increase in coverage
S Africa
Russia
2 Listening to Mann ki Baat
3 Following his Twitter feed
Lead to NPAs
modern Barcelona to Antoni Gaudí. Regency-era London got that it’s like being 80
Thailand S Korea Brazil Apropos ‘The Public Over Pro-
4 Seeing himself in ‘that’ suit moter’ by T K Arun (Nov 29), as
a makeover thanks to John Nash. But all this is so 19th and 20th born rich and 70 Australia
5 Running around to get his Aadhaar card per a long established business
Source: World Social Protection Report 2017–19

century. The 21st century offers a new and wonderfully exci- HK

getting poorer.” 60 Nepal tradition, most promoters in
ting option for governments keen to design new cities: ask gre- India, before germinating any
Joan Collins 50
project, make thumbnail cal-
at companies. Google, Apple, Tesla, to name three technology Actress
Mexico
Vietnam
leaders as admired for their fine sense of aesthetics as for the- 40 culations of the maximum pad-
Iran
30 Sri Lanka
ding percentage based on its
ir business models, are perfect candidates for designing 21st- India economic viability. The next
century urban spaces. 20 Malaysia process is how to polish and
Indonesia Ethiopia Turkey
Decrease in coverage puff the planned padding in the
For one, some of these companies have already built or are 10 Mauritania
building vast corporate headquarters for themselves that are Lao PDR project costing. In formulation
0 Pakistan for project-padding strategy,
redefining architectural norms. So, they Cambodia 10 20 30 40 50 60 70 80 90 100 besides seeking active indul-
have both the practical experience and Population above pensionable age receiving a pension in 2000 (%) Illustration: ANIRBAN BORA gence of bankers, bureaucrats
the design nous to conceptualise a new ci- and political masters, energe-
tic involvement is sought from
ty. Second, these are high-performing,
project consultants in mani-
ambitious companies always looking for pulating puffed costing, as also
the next frontier to conquer, and the chan- INDIAN RAILWAYS Citings from overseas suppliers of eq-
ce to design a whole city is just the ticket uipment and machinery who
are willing to park padded costs
for a Google or an Apple. Third, the bran-

Tear Up Those Old Tracks Of Ideas & in tiny tax havens.

ding they will bring with their association will be a huge asset In future, to minimise project
for a new city. Fourth, these companies immensely value their puffing that invariably results
reputation and their core businesses generate oceans of mo- Opinions in NPAs, bankers, financial ins-
titutions and government will
ney, so they will design cities to burnish their name, not make ds for introducing new trains without passenger trains. have to streamline and streng-
some extra cash — perfect partners for governments. RICHARD BOOKSTABER
commensurate inputs towards creati- Ideally, these tracks should be on a then the project-cost appraisal
Indeed, given all this, it is surprising that no government has on and maintenance of infrastructure washable concrete apron. This, how- This book explores what it wo- mechanisms on a continuous
thought of inviting Google or Apple or Tesla to design a new ci- has led to a scenario where the state of ever, hasn’t happened even in the New uld mean to follow the path to basis so that loan disburseme-
the fixed infrastructure, including Delhi Railway Station thanks to diver- see where it leads. It provides a nts reflect ground realities.
ty, even as new cities or new urban spaces are being planned in tracks, at many places, is cause for gent opinions of the IR’s department- non-technical introduction to
every major country. We suggest India take the lead. India is serious concern. al silos. In the absence of boundary agent-based modelling, an alt- B RAJ BHANDARI
planning to build several smart cities and it has had horrible Ashwani Lohani Tracks at many places, especially in walls, rampant encroachments and ernative to neoclassical econ- By email
experience with city planners, as our urban ugliness in major yards and stations, are in a caked con- settlements — especially adjoining omics that shows great promi-
metros shows. Along with Mesopotamia, the world’s first ur- The derailment of 13 coaches of the
dition, the result of years of not being
deep-screened (cleaned). The conditi-
railway tracks in urban areas — also
contribute to this malaise.
se in predicting crises, averti-
ng them, and helping us reco- Net-Net, Trai on
ban settlements happened in the Indus Valley. It will be fitting
if India is the first country that invites 21st century’s best de-
Patna-bound Vasco Da Gama Express
near Manikpur railway station, Uttar
on of the rolling stock also is abysmal
with the infrastructure and automa-
At the root of the rot lie the archaic
processes and outdated structures of
ver from them.
This approach doesn’t postu-
Right Bandwidth
Pradesh, on November 24 that killed tion at maintenance units not having the administrative machinery. Comp- late a world of mathematical- This refers to the Edit, ‘Adopt,
signers to build its new cities.
three and injured at least 12 people kept pace with the rapid increase in lex rules have dampened efficiency ly defined automatons; inste- Enforce True Network Neutra-
reinforces one thesis: over a long time, workload. A stage has now arrived and restricted growth. They have also ad, it draws on what science lity’ (Nov 30). The Trai recom-
the railway system in India has accu- when the accumulation of such con- blurred the distinction between deli- has learnt recently from the mendations, in effect, mean
mulated a massive infrastructural ditions can’t be merely wished away. very and processes, bringing with it study of real-world complex that the internet service provi-
deficit that is behind most Indian Directed corrective action is needed attendant consequences. systems. In particular, it dra- ders cannot create zones for ex-
It cannot buy much, but it remains an Railways (IR) accidents. and has been initiated. For some time, IR’s focus on human resources (HR) ws on four concepts that have clusive infor-
The rapid increase in the number of however, a price may have to be paid has been rather dim. Petty corruption atechnical ring but are intuiti- mation to the
invaluable addition to rounded sums trains and passengers has far outpac- by way of delays in train schedules, has also come to rule the roost, and ve: emergent phenomena, er- privileged for
ed the small strides that IR has been drastically reduced number of new motivation levels are low. Decision- godicity, radical uncertainty huge profit-

One Rupee Indians making towards improving and dev-

eloping infrastructure. As a result, we
now have reached a stage where findi-
ng a balance between train operations
trains, cancelling some trains, etc.
At many places where accidents
have taken place due to rail fractures,
corrosion at the foot of the rail has
making has also generally been cons-
picuous by its absence.
That a government institution, the
Indian Railways, has to manage cor-
and computational irreduci-
bility. Emergent phenomena
show that even if we follow an
expected path, we’ll miss insi-
making. The
Trai needs to
be applauded
for not succum-

Just Can’t Do Without and maintenance of infrastructure —

especially those directly related to the
running of trains, such as tracks, sig-
nalling systems, stations and yards —
been found to have been the cause.
This also leads to the premature des-
truction of rails and increases the cost
of overall maintenance. Tracks in plat-
porate-style delivery, operations and
structure while remaining within the
confines of codes, procedures and
general financial rules (GFRs) makes
ght into the overall system.…
The fact that as real-world
economic agents, we couch
our interactions in our ever-
bing to obvio-
us pressure from giant telecom
companies and internet servi-
ce providers. So, companies
Considering its value has depreciated hugely since its debut
is becoming increasingly difficult. form areas are especially vulnerable the working much more difficult than changing experience means like Facebook and Airtel can-
during the World War I, that the .̀ 1note still exists — brought The horrific incident of the rush- due to accumulation of dirt and muck any other service organisation. So, in that we are a moving target for not revive their Free Basics
back from the dead in 2015 and then given a new look in 2017 hour stampede at the overbridge at from water and human faeces from the long run, simplification of pro- economic methods that dema- and Airtel Zero plans.
—is a testament to the sentimentality of Indians. These notes Mumbai’s Elphinstone railway stati- cesses and greater empowerment will nd ergodicity, that is, conditio- Any kind of paid prioritisati-
came into being because their silver avatars were being melt- on on September 29 that killed 29 peo- need to be looked at seriously. ns that do not change. And we on for content delivery will lead
ple is a classic case in point. Most stati- The magnitude of the problem is as don’t even know where to aim, to the net being monopolised by
ed for metal value by war-wary people; but they are still arou- ons and associated infrastructure are massive as it is real. Sustained focused because of radical uncertain- the affluent classes. The tele-
nd now even though the cost of printing the paper version is creaking under the load of far more efforts supported by political will and ty: the future is an unknown in com ministry should impleme-
.̀ 1.14. And what does .̀ 1 buy these days? Some might suggest traffic than they were originally desi- bureaucratic commitment over a a deep, metaphysical sense. nt these recommendations and
Air India or postage stamps, but usually it is a lozenge or a gned to safely and efficiently handle. considerable period to transform the Neoclassical economic theo- usher in a liberal and unhind-
Yet, the fact remains that the railwa- system and bring about organisatio- ry cannot help because it igno- ered net neutrality regime. It
toffee. No wonder candies are the de facto .̀ 1in most transac- ys handles almost 23 million passeng- nal reforms is the only way out of the res key elements of human na- should ensure that ‘specialis-
tions given the rarity of the smallest denomination note in ers and over three million tonnes of mess. After all, we are talking about ture and the limits that these ed services’ excluded from the
actual circulation despite its obvious indispensability. freight every day. This is possible only neglect accumulated over decades. imply: computational irredu- purview of net neutrality are
Most .̀ 1 notes are cornered by marriage organisers, to be due to the commitment of its employe- Reforms will have to remain the cibility means that the comp- not misused by rapacious tele-
es and the sturdiness of its operation- keyword for the railways. Cultural, lexity of our interactions can- com operators and internet
dangled on the chests of caparisoned bridegrooms en route al processes. IR can, however, do far process and structural reforms shall not be unravelled with the de- service providers.
to their nuptials. Countless others would be salted away by better if it is not hampered by the com- have to be taken to their logical con- ductive mathematics that
plexity of its administrative processes clusion. A direction that this monolith forms the base — even the rai- G DAVID MILTON
FILE PHOTO

wedding guests to be added to envelopes containing even-

and management structures, both of has already taken. son d’être — for the dominant Maruthancode
numbered gifts of money to make them indivisible (and aus-
which are proving to be major hurdles model in current economics.
picious) prime numbers. So, even in these times of e-transac- in consolidation as well as growth. The writer is chairman, Railway Board,
Letters to the editor may be addressed to

tions and digital payments, the .̀ 1note remains coveted. Regularly bowing to populist deman- Parallel lines in chaos Indian Railways From “The End of Theory” editet@timesgroup.com