Combat slowdown at micro macro levels

Combat slowdown at micro macro levels

Core sector data for September, which shows output down 5.2% (over like period last year), points to faltering demand in the backdrop of weakening growth. The decline has been led by a steep 20.5% fall in coal output, while every sector declined in September save fertiliser. Four of the eight sectors have registered negative growth over the last six months, over the like period last year: coal, oil, gas and refinery output. Over the first six months, output of cement grew 0.7%, of fertiliser, 1.1%, of electricity, 3.6%, and of steel, a robust 8.5%.

Coal imports, already high, have been further gathering steam of late. Hence the pressing need to proactively overhaul market design in coal and fast-forward commercial mining, complete with forward-looking investments to shore up infrastructure and connectivity. Over half our sedimentary basins remain practically unexplored for hydrocarbons — which clearly needs expediting — and there is a clear need to modernise and revamp consumption taxes and duly bring the main petroleum products under the GST regime, too. The extant tax-on-tax regime for petro-goods is both high-cost and a stumbling block for efficiency improvement in logistics. It calls for speedy reform, albeit with added levies for negative externalities. Reform in the power sector is urgently called for — of the real kind, that makes consumers pay for the power they consume, not financial engineering of some sort.

The Purchasing Managers’ Index for manufacturing also points to stagnant manufacture. There is a case for sector-specific troubleshooting, certainly, but even more emphatically, there is a case for a macro-level demand boost funded by the exchequer. The Delhi-Mumbai Industrial Corridor project, which has been dragging its feet, could be accelerated.