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ET Special Podcast (ET Online)
03:31 Min | October 18, 2019, 7:48 PM IST
Join in as the hosts try to pick at what is causing the extended period of low economic growth.
TranscriptAre things really that bad, is the slowdown for real. How do we know we will be good in the long run? Let me disappoint you with a John Maynard Keynes quote then. (add drama) This long run is a misleading guide to current affairs. In the long run we are all dead.. Yes, yes I get it. Slowdown has become a slugfight. The FM is countering Manmohan Singh's charge, and Raghuram Rajan's charge, and a lot of other charges. But what's missing in action is corrective action. Hello I am Rahul Aripaka and I am Poorabi Gaekwad this is ET Special Podcast on the current slowdown.
So, how did we get here? You mean, all the anchors yelling at the top of their voices are actually making sense? To understand what exactly happened with the economy is surely a complicated task, but one thing is for sure, it's hit the consumers, and its hit them hard. No one's buying for sure. The young, old, rural or urban. Yes, in fact I read a report today that said the rural FMCG growth dipped to a 7 year low for the first time. Bad? Very Bad. Hindustan Unilever has sent up the flares, says it is seeing this kind of poor pickup for the first time. There's a cash crunch it says and it's hurting everyone bad. Well, if the country's largest consumer firm is saying that, it sure does merit a think. A think would be an understatement. So, how did we get here. Well, liquidity has evaporated from the system, which is affecting consumer demand, which leaching on to factories, who have no other option but to cut down on production. And that hits where it hurts the most. I know jobs. No jobs, no paisa, no kharacha, so low consumer demand. This vicious cycle is set to intensify the liquidity debt even more. And it doesn’t help that credit growth at banks is at 8.8%, which is its lowest in about two years. If the economy is growing at an appropriate rate, a good credit growth means more lending opportunities for people or corporates. And if the economy isn’t doing well, like now, these opportunities drop drastically. Which is what is probably happening right now. What about banks? That's where the problem is. When the RBI dropped the PCA bomb, it made them freeze. Many state-run banks stopped from lending further. And because they couldn’t lend, it led to a considerable impact on economic growth, and consecutively, the creation of jobs. Then the NBFCs came in, and the sectors that pulled down the banks did the same thing to them. A few missteps like ILFS and poof the money started vanishing. And we were back to square one. With lesser money and more worries. So the solution? Well first let's bury the hatchet and stop the naming and shaming. India needs to move on. It needs corrective action more than criticism. Let's hope Diwali turns things around. For more news views and cues log on to the economictimes.com
Script: Poorabi Gaekwad
Hosts: Rahul Aripaka, Poorabi Gaekwad
Producer: Sakshi Prashar