- Cutting across the state of the world economies in all the countries, there is no disputing the fact that the ongoing US-Israel-Iran war is not only creating deeply disturbing outcomes everywhere but also will hurt the future growth plans substantially. The feeble and fragile efforts undertaken by the protagonists to usher in a much-needed thaw in the war haven’t yielded desirable results despite overwhelming push from all concerned. Who will blink first appears to be the driving force, since the US and Iran leadership are not prepared to yield anything that would provide a tangible pathway to initiate peaceful measures. Now on, now off peace overtures, largely based on feeble grounds, haven’t helped the cause one bit. Little wonder the global community is suffering.
PC: KNN India
- The spiralling inflationary trends on the back of severe curtailment in the critical energy supplies have pushed the cost of living alarmingly higher. Would a better sense prevail, allowing the US and Iranian leadership to enter into a workable truce for the overall good of the universe? How will India fare vis-à-vis the envisaged growth versus the reality on the ground? The Iran war will probably hurt growth, but proactive policies can absorb much of its impact. It’s clear that 2026 won’t be a great year for the economy. It started with projections of 6.8-7.2% growth. A day before the US attacked Iran, the chief economic adviser raised his estimate to 7.1-7.4%. But now, with oil stock and a falling rupee, Moody’s sees India’s growth slowing to 6% this year.
PC: Outlook Business
- Reasons are clear – high input costs will raise prices, and high inflation will depress demand. What can the government do? To start with, the rupee’s weakness should be considered India’s strength. A year ago, $1 was worth roughly Rs. 85. Now, it’s around Rs.96. That makes Indian exports cheap and competitive. Foreign manufacturers would like to set up shop here, so roll out the red carpet. Now is also the time to wean India off imported oil and gas, decisively. Of course, PM has urged farmers to switch to solar pumps, but EVs and biofuels should be thrust areas as well. Meanwhile, if Russia is willing to sell oil for rupees, we should sign more long-term contracts. And, to earn more dollars, let’s court tourists, including medical tourists, this year if it helps.
PC: Free Press Journal
- Also, what about consumption demand, the biggest driver of India’s economy? Inflation is bound to hurt it, especially at the lower end of the consumption pyramid, despite generous cash transfers by the Centre and states. But, as the pandemic showed, premium demand remains resilient, socompanies should target it to drive growth. Post-GST momentum in white goods and automobiles should be maintained. The top 1% are likely to spend more when they’re feeling wealthier due to strong stock markets. So, small policy tweaks – for instance, raising EPFO investments in stocks – can have the desired effect. In conclusion, we can play it safe by hunkering down and settling for 6% growth or take some risks and aim for 7%. Let’s wait and watch.
