Can the Finance Minister save Modinomics from failing on February 1?

The first advance estimates released by the National Statistical Office (NSO) on Tuesday pegs that Indian Gross Domestic Product (GDP) will grow at 5% in the financial year 2019-20 (FY20), which is lowest in the current series with 2011-12 as the base year. The projected growth is the lowest since FY09, when the GDP grew by 3.1%, the year when the world was hit by a financial crisis.

While looking on the numbers I was just wondering about the Prime Minister Narendra Modi's ambition of turning India into a $5 trillion economy by 2024-25. The projection also throws a big question on Modinomics as Indian economy is not doing well during Narendra Modi's second term as a Prime Minister of the country.

The GDP numbers for the last two quarters makes me think that way. It, the GDP, grew by 5% in June 2019, or first quarter of FY20, which further slowed to 4.5% in the September quarter.

Apart from the GDP numbers, there is a contraction in industrial and manufacturing output, while retail inflation is going up. The same is the case of employment of the nation as joblessness is at its peak, at present. At the same time, economic growth is not showing any signs of an uptick. Even the Reserve Bank of India (RBI) didn't announce any further monetary support in the form of economic stimulus in its last policy announcement.

The situation highlights the challenges that confront the government-led by Prime Minister Narendra Modi. Certain Data to Support my statements:

Unemployment Data: Centre for Monitoring Indian Economy (CMIE) in its data released on January 2, 2020, said India's unemployment rate increased to 7.7 per cent in December 2019, slightly higher than 7.48 per cent reported in the previous month. In November, the unemployment rate had fallen nearly 1 per cent to 7.48 per cent compared to a three-year high of 8.45 per cent in October 2019.

Core Sector Data: India's core sector in November 2019 contracted for the fourth consecutive month but the pace of contraction slowed to 1.5% from 5.8% in October led by growth in output of cement and refinery products, fertilizer, raising expectations of industrial production moving into the positive territory.

CAD: India's current account deficit (CAD) has narrowed to 0.9 per cent of GDP or 6.3 billion USD in the second quarter of FY20. It stood at 2.9 per cent of GDP, or 19 billion USD, in the corresponding quarter of FY19. It was 2 per cent of GDP, or 14.2 billion USD, in the June quarter of FY2019.

Fiscal Deficit: India's fiscal deficit reached an alarming level at the end of November at 114.8% of the budgeted target for the financial year, highlighting the challenge the government faces in meeting its fiscal goals. The deficit or the gap between the government's total receipts and expenditure reached Rs8.07 lakh crore as of November 30.

The data suggest that a big challenge is waiting for a response of the Union Finance Minister Nirmala Sitharaman. The challenges can be answered only through a power-packed Union Budget that can revive the slowing economy, create the job and increase demand as well as the purchasing power of every citizen. Smt. Sitharaman will be presenting the Union Budget 2020-21 in the Parliament on February 1, 2019, Saturday.

However, it is going to be a tuff task for her, in terms of announcement, because almost major announcements, like Corporate Tax Cut and a package of Rs102 lakh crore to boost infrastructure sector, which would have been a part of the budget has been announced in the third quarter of FY20.

Being optimistic, I would like to conclude with a hope that the Finance Minister will make successful efforts to protect the failing Modinomics or the slowing economy and make it a $5 trillion economy by 2024-25.