Core Industries Growth in Dec 23 is the slowest in 14 months

 According to a press release from the Commerce Ministry, the Index of Eight Core Industries (ICI) increased by 3.8% in December 2023 compared to the previous year. The release also stated that the production of coal, natural gas, steel, fertilizers, refinery products, cement, and electricity increased in December 2023

However, the growth of India's eight core sectors slowed to 3.8% in December 2023, which is a 14-month low. This is a significant decline from the 8.3% recorded in the same period the previous year

The eight core industries in India make up 40.27% of the weight of items in the Index of Industrial Production (IIP). The IIP is a measure of the growth of various sectors of an economy, such as mineral mining, power, and manufacturing

The eight core industries in decreasing order of their weightage are:

1. Refinery products
2. Electricity
3. Steel
4. Coal
5. Crude oil
6. Natural gas
7. Cement
8. Fertilizers                                                                                                                                                                                                                                                                                The rest of the IIP is dependant on Exports growth for incremental growth and Manufacturing of Consumer non-durables and Consumer durables etc. which in turn will depend on disposable income on hand.                                                                                  When Private Final Consumption Expenditure is languishing especially in Rural areas(Refer "State of the Economy-Jan 24" -RBI), the growth of GDP may be impacted in the months to come, when fiscal stimulus steroids through deficit gets curtailed.                                                          

Significance of Ayodhya temple for Civilisational re-awakening

 "தருமத்தின் வாழ்வதனை சூது கவ்வும்;தருமம் மறுபடியும் வெல்லும்" என்ற பாரதியின் வாக்கு பலித்தது - நேரடியான எடுத்துக்காட்டு அயோத்தி இராமர் கோவில்.

This Ram temple has become a reality in India after 500 years and still those who are opposing it must remember that it has not been built in Mecca or Medina ,but in Ram's Janmasthan/birthplace in Ayodhya in India i.e Bharat!!

It is incumbent upon media and Journalists to write reinforcing PM's words on Goodness ,Harmony and Dharm represented by Ram.Ram, according to Valmiki, lived as an ideal man which needs to be emulated by all human beings.Truth,Valour, sacrifice, patience, perseverance , endurance,persistence,forgiving others,being grateful are all eternal ideas and Ram is the personification of these values in life.His friendship with Tribal king Guha and his acceptance of forlorn Sabari are symbols of love, inclusivity and humility. We should Write how Ram's value systems are relevant to India as a modern civilisation  and  to our Constitutional Rule of Law .Ayodhya Court battle itself was a true representation of Ram's Rule of Law where all sides were given equal chance to air their views and present evidences.Court verdict was won not by the Might of the Majority but by Ram's way of Equity ,justice and Rightfulness. It was a judgment "by the Righteous,for the Righteous &of the Righteous"

Gandhiji said that Rama and Rahim are one for him but , whether the Muslims were and are  prepared to accept his words and accept any diety?So without acceptance or meeting of minds , Gandhiji's words sound hollow and empty and so his words lost its relevance . His words cannot be sought to be forced upon one side alone, by letting of the other side by pampering or appeasing them.To some extent ,to show the large heartedness we can extend our friendship hand and if they hit our hands taking our compassion and concern as cowardice, then the other side will only invite reaction and retaliation

Yes, the structure that was deemed to be masjid was demolished and then Ram temple has risen there.However those who are opposing must also remember these things 1) in the first place it was not used for prayers/namaz by Muslims for many years atleast since the locking of its gates by Congress Govt since 1950 onwards;2) Supreme Court has looked at it as land ownership dispute and has settled the case in favour of the Hindus who presented evidences and records to prove their genuine ownership.3)Say a land is owned by those opposing the temple and the usurper of their land after taking illegal possession constructs a house in that land, would these owners abandon their land in favour of usurper and allow him to use the house constructed in their land , genuinely owned by them?!

India's Fiscal deficit glide path linked to India's credibility

 India's Fiscal deficit budgeted for FY 23-24 was 5.9% of GDP which is an important metric for measuring the efficiency of the Government of India in comprehensively managing its finances including its Revenue Collection and its Spending efficiency in terms of Capex as well as Revenue expenditures.

As per FRBM Act GOI has taken up an obligation to reduce the fiscal deficit over the years and bring it down to 4.5% in Fy26.In this context, we need to understand that in FY 25 it has necessarily reduce it to 5.3% or less than that and in the forllowing FY26 it has compress the Fiscal deficit to 4.5% inorder to achieve as committed.

Why this FD reduction is important

1)Fiscal deficit means that the Government is living beyond its means i.e it is borrowing out of its future revenue streams. More the FD, the Govt may be forced to borrow if its Revenue collections languish or expenditure runs out of control.We have seen two Covid years where GOI faced double whammies in both the years when Revenues faltered and Revenue expenditure skyrocketed due to subsidies and free foodgrains to people.Therefore we should reduce FD in years of relative stability like the current years inorder to save for rainy years lest we face storms in the coming years.

2)FD of Centre and States combined is already more than 8% and this profligacy, may mean more borrowings by both Centre and State which will burden the Govts, with huge servicing costs i.e interest payments.Since our Govt debt to GDP is already high at more than 80% and should we face another Covid type Black Swan event, then our borrowings level may go out of hand.

IMF has already warned about this untenable  Government Debt to GDP levels getting out of hand if necessary steps to rein in Fiscal Deficits are not taken.

When Govts. borrow more for Revenue expenditure that may crowd out Private sector investments, which will adversely impact further asset creation and generation of employment.

3)Containing FD becomes an important signal to lenders and Ratings Agencies across the globe that we are committed to Fiscal Discipline. GOI's credibility in fiscal management is in sticking to its committed fiscal deficit glide path when the weather is clear. Only by adhering to the promised Fiscal deficit glide path we can improve our sovereign ratings , which will help both the Govts as well as private sector to source funds at cheaper rates.

4)High FD of 5% or more will stoke inflation in the economy and if major portion of FD is for Revenue expenditure, then the country and its people may face high inflation. Inflation in true sense is a Tax on the poor and it constrains the disposable income in the hands of the people which will not help in the cause of growing our economy rapidly.

5) Fiscal deficit has a moral hazard dimension,  since Fiscal deficit indicates that we are borrowing from our children inorder to sustain or feed ourselves today.In short as fathers and grand fathers we are living beyond our means. As per reputed Economists,only FD of 3% of GDP is sustainable in the long run and we have a long way to go.