The economic slide: comparison with China
STORIES, ANALYSES, EXPERT VIEWS

In a tell-tale sign of desperation among lower-income borrowers struggling to keep their heads above water, loans against gold are surging at a 50%-plus annual pace.
In the absence of meaningful private investment and job creation, Andy Mukherjee, Bloomberg writes “India is slipping back into its pre-Covid-19 rut, and its economic czars are once again publicly refusing to acknowledge the slowdown, blaming a long and busy election season for tepid public spending.”
Privately, though, they seem to be worried enough to abruptly replace a key decision maker, RBI chief Shakti Kanta Das with Sanjay Malhotra, a top finance-ministry official. The change will open the door to a rate cut and correct the central bank’s restrictive policy, partly responsible for a severe slowdown in recent quarters,’ according to Bloomberg Economics.
At 6.5%, the benchmark interest rate is exactly where it was when Das took charge of the RBI in late 2018. The economy is “missing a lot of the output that would have been produced had gross domestic product just kept chugging along at its former rate.”
Growth down, inflation not yet tamed: Growth in manufacturing output has collapsed to just about 2%, from 14% a year earlier, after adjusting for price increases. Inflation, which spiked around the start of Russia’s war in Ukraine, has never been fully tamed. As a result, writes Mukherjee “short-term interest rates are 150 basis points higher than in 2019, and — because food is still very expensive — the start of a monetary-easing campaign has been delayed. Fiscal policy, meanwhile, is pressed into the service of keeping 800 million Indians on free rations, a pandemic-era safety net being buttressed by state politicians with cash handouts to disadvantaged women.”
46% of the population still in farming: And “for the first time in many decades, more urban migrant workers went back to their villages and became a part of the agrarian workforce than came out to seek better opportunities in cities. A little over 46% of the population was in farming last fiscal year, compared with 42.5% in 2019.”
Low rate of women’s workforce: India’s “abysmal rate of women’s workforce participation has improved sharply, but that’s only because a lot more of them are self-employed now. Helping out on the farm or in tiny family-owned enterprises isn’t exactly producing steady cash earnings. Even as a good harvest lifts prospects for the rural economy, a funk in white-collar jobs in industries such as code-writing is weighing on urban demand…..”