UNSC discussion about Kashmir: Way forward from an economic perspective

The lack of an outcome of the closed-door discussion on Kashmir in the United Nations Security Council (UNSC) is a diplomatic victory for India. In an implicit criticism of China and Pakistan, Syed Akbaruddin, India’s Ambassador and Permanent Representative to the UNSC, relayed that the UNSC recognized that “Article 370” was entirely an internal matter and henceforth, holds no external ramifications.
 
In effect, all of these reflect India’s growing diplomatic clout coupled with Pakistan’s failure to internationalise the issue. But this should not mean that India can rest on its diplomatic laurels. Truly capturing the benefits of the revocation of Article 370 implies a sound economic development of the state.
 
Behind the decision to revoke Kashmir’s autonomy has lingered the intention of boosting its economy. As PM Modi captures it well in an interview given to the Economic Times, where he states that “the greatest casualty (to the Kashmiris) was the lack of any proper economic avenues to increase earning” and abrogation of these roadblocks i.e. Article 370 and 35 (A)would ensure that people obtain economic opportunities.
 
The Prime Minister also emphasized upon the fact that how Article 370 acted as a stumbling block or impediment in the process of industrialization and concluded that through this revocation, integration with the Indian mainland would boost investment, innovation and outcomes.
 
A pertinent criterion of economic growth is the tide of investments that needs to seep down into the economy. However, investments are unlikely to be forthcoming as long as the state continues to be crippled with unrest. For instance, Kashmir received only $6 million in foreign direct investments between April 2000 and April 2019, the lowest among Indian states. Moreover, the economy, mostly reliant upon agriculture and handicrafts, shows a declining contribution, exacerbated by factors such as vanishing jobs, lower disposable income sand lackluster expansion of the state’s economy.
 
To remedy this crisis, what is required a sustained string of public investments in form of connectivity or power supplies by the Modi administration. For private investments to trickle in, which is still far-fetched given the present crisis at hand, it is important that governments at every level work together by engaging communities in Jammu & Kashmir and Ladakh to ensure that the promises made by the Centre are translated into action.
 
India Outbound
August 27, 2019

 
 

source https://indiaoutbound.org/unsc-discussion-about-kashmir-way-forward-from-an-economic-perspective/

Kickstarting a slowing economy is a challenge that the Indian government needs to fend off

Currently, there exists a persistent shroud about an economic slowdown. For those who are still grappling with the concept, consider this as an example. You are deriving a monthly salary from working in a firm. With that salary, you buy your groceries from a supermarket, dine at a restaurant, employ a help in your home and pay your taxes. What has happened here is that the movement of the money has generated activities within the economy, which would not have happened if you had simply deposited the salary in a bank. In other words, this capital movement has contributed to the Indian Gross Domestic Product (GDP).
 
GDP, in the conventional sense of the term, simply means the measure of all the goods and services produced within a country during a specific time. In this sense, GDP measures the movement of money through and around the economy or rather the economic activity. The above instance adequately substantiates how economic activity contributes to the country’s GDP. Now this cycle of activity is supposed to work and add to the economic activity and GDP.
 
However, it is this economic activity that has taken a beating in India, since the beginning of 2019. As per data from the Central Statistics Office, the GDP growth from January to March 2019 has slowed down to a 5-year low of 5.8%. If we consider the economic activity taking place after the period, it would be pragmatic to concede a further slowdown.
 
Given that consumption forms the most important part of the Indian economy, thereby impacting the overall economic health of the country, it would be prudent to take stock of any slowdown in consumption. The most recent example of this is the crippling of the auto sector, due to a paucity in demand and recurrent job losses. As per the data released by the Society of Indian Automobile Manufacturers (SIAM), vehicle sales across categories, including passenger vehicles and two wheelers have witnessed a decline of 18.71%, the sharpest fall in the last 19 years.
 
The impact of this deepening slowdown has been felt beyond discretionary purchases such as vehicles and has impacted other industries such as the Fast Moving Consumer Goods (FMCG) companies. For Hindustan Unilever, considered to be the largest FMCG Company, there was a 7% point dip in volume growth between the June quarterthis year versus the same period last year. Other companies like Britannia and Dabur have also recorded a similar slide, which indicates a worrying trend, given that people seem to be going slow on even everyday purchases.
 
Such an all-round demand deceleration is worrying given that India has primarily been an economy where supply is constrained. At the core of it lies the obvious fact that incomes are simply not rising enough. Of particular interestis the decline in household savings, as they are a net supplier of funds to both the corporate and the government sector, which have declined to 17.2 % of GDP in 2017-18 from 23.6 % of GDP in 2008-09.
 
The current slowdown in demand is an undeniable fact that the government will need to address. Multiple meetings have been held between the Finance minister and the industry heads to reverse the prevalent economic slowdown. It is crucial that the government enables the initiation of high-end growth, sustained by a virtuous cycle of savings, investments and exports to kickstart the Indian economy again. For this to take place, it is imperative that a coordinated policy response is formulated with the support of the private sector.
 
India Outbound
August 21, 2019
 
 

source https://indiaoutbound.org/kickstarting-a-slowing-economy-is-a-challenge-that-the-indian-government-needs-to-fend-off/