The nation, along with rest of the world, stepped into the year, 2014, at zero hour last night at the end of what many might feel like describing as a nightmarish year, in terms of both political and economic developments.
However, the dreadful time, it seems, is not yet over. The confrontational politics that caused untold physical, social and economic sufferings to millions across the country for the last few months has trailed the nation as it has entered the New Year.
Nobody knows for sure how much toll the troubled politics would exact in the coming months. Yet one can, at least, be assured that the economic toll will be quite a heavy one.
There is no denying that the people had to endure terrible physical sufferings during hartals and blockades enforced by the political opposition during 2013, particularly in the final months of the year. This was largely because of disruption caused to communications throughout the country.
But the economy took a serious beating. Large, medium and small manufacturing and commercial units have virtually been brought to their knees.
The large commercial and manufacturing units might use their reserve-strength to cope with the problems for some more time. But the worst-hit small and medium enterprises, according to their owners, are not in a position even to pay salary and wages to their employees and workers.
When the overall business scenario is so pitiable, it is hard to expect the national economy to remain in a better shape. And a number of economists, while talking to The Financial Express last Monday, portrayed rather gloomy economic prospects for the country in 2014. And, their observation is based on the developments in various sectors of the economy in 2013 and the political trends and their possible consequences for the economy in 2014.
The economists have noted that the year 2014 is most likely to be a 'bleak' one for the country's economy. This means that the economy's prospects of flourishing would be, other things remaining the same, a remote possibility to exploit even to any marked extent. However, such a frustrating projection on their part is not for any external reason since the problems are truly indigenous and man-made.
It is obvious that the economic growth rate would be far less than the official projection at 7.0 per cent during the current fiscal year. Even with an immediate improvement in the political situation, the growth rate reaching 6.0 per cent might prove really difficult.
The uptrend in inflation should cause enough of worries to both the ministry of finance and the consumers. After showing a declining trend in the months of September and October, inflation in November last went up and the trend might have persisted in December also. But the situation should have been the opposite during the winter months with the arrival of Aman crop and availability of sufficient quantities of fish and vegetables. The disruption in supply of essentials due to political programmes was responsible for higher costs and the consequent jump in food-inflation.
The danger of loss of jobs by a good number of people employed in small industrial and commercial establishments now looms large. With the current political situation persisting in the future months, this could prove a real possibility.
The year 2013 was a terrible one for the banks. The troubles the state-owned banks faced, in most cases, were their own making because of weak management, poor selection of borrowers and political interference.
The private sector banks mainly suffered due to weak demand for funds under otherwise sluggish economic conditions. Their profit earnings are most likely to be at one of the lowest levels in recent history. Even some banks might incur losses, if their accounts are fairly prepared and no improper advantage is taken of the latest directive of the central bank about relaxed conditions for classification or reclassification of their loan portfolios under the prevailing conditions in the country's economy, amid serious buffeting by its fractious polity. The banking sector witnessed a surge in their non-performing loans in the recent months. The banks might find it really difficult to make a turnaround within a short time even if the political situation takes a positive turn sooner rather than later. Besides, the banking sector was jolted by a few loan scams, though not all being as large as the one of the Hall-Mark.
The performance of the external sector was, however, not disconcerting in 2013. The export recorded more than 13 per cent growth in the first five months of the current fiscal over that of the corresponding period, despite a major industrial accident -- Rana Plaza collapse, serious concern expressed by the international buyers of apparels and suspension of GSP (generalised system of preferences) by the US. The import of raw materials, capital goods and essentials was also steady and stable in 2013, though the rise in import of duty-free capital machinery in a stagnant investment scenario was somewhat puzzling. Some analysts explained this phenomenon, giving a hint at possible flight of capital through over-invoicing.
The balance of payments (BoP), however, did not experience any kind of pressure in 2013. But with the ongoing trend about receipts of remittance and flow of export orders in recent months, the BoP might come under pressure in the near future.
The foreign exchange reserve continued to go up throughout the year and crossed the $18 billion mark in December last. The amount is more than sufficient to meet country's import requirement for five months.
The performance of the stock market was as-usual except for sudden abnormal buoyancy, which, according to market insiders, was nothing but outcome of small-scale manipulation from time to time. The craze among a section of investors about new stocks, low-cap issues and multinationals appear to be highly unusual. The securities regulator continued to show its indifference towards these developments. However, the overall performance of the stock market was stable and steps were already taken for the much-needed demutualization of the stock exchanges. The market did not react even to serious political developments in the country. That was, by any measure, highly unusual.
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