Journal Press India^®

Slowdown of Indian Economy

The central Government has a very high ambition goal to take the Indian economy to USD five trillion. To achieve this, India has to consistently achieve and maintain a minimum of 9 per cent plus growth rate for the next five years. Surprisingly, the recent economic indicators reflected that the GDP growth of has declined to almost five percent in the first quarter of financial year 2019-20. Further, more alarming is that the sectors contributing to the Indian Economy’s growth process viz. Automobile, Real estate, FMCG, Manufacturing, Agriculture are far behind in achieving desired growth rate and sustaining jobs in these sectors have posed serious challenges and problems too. The controversy is that the Government does not fully endorse to the views of economic slow-down while the opposition political parties remain critique of alarming situation. The international credit rating agencies have forecasted declined GDP of India in this fiscal including the Reserve Bank of India. The official data released by the National Statistics Office (NSO) confirm that. Weaker consumer demand and slowing private investments are the two key factors behind the Indian Economy Slow Down. Eight core sectors have registered negative growth of just 2.1% in July, compared to 7.3% in the corresponding month last year. According to the Centre for Monitoring Indian Economy (CMIE), the overall unemployment in India has now touched 8.2%, with a high urban figure of 9.4%.

Among the Economists, there are often differences of opinion where one school of thought is optimist and analyze the happenings and economic issues with bit hopes while another group follows the other side of the coin. Nevertheless, the fact remains that the Indian economic growth has had a jolt and it is very much evident from the facts and figures. Rather than debating and struggling for the context, it is more relevant to suggest the ways and means to increase the pace of economic growth in a phased manner and regain the GDP growth and job opportunities. The $100 billion automobile industry that employs 370 lakh people and contributes 12% to the national GDP, is suffering from higher degree of slow down. According to estimates, 3 lakhs jobs are lost, Sales have gone down and the automobile industry appears to be going in reverse direction.

The government, outwardly, may not agree on the economic slow-down but it has all the concerns and seriousness at all the levels and this is the reason the finance minister has initiated series of measures by way of tax sops and other incentives to promote the industry and business sector. The reasons for this kind of slow down are many fold beginning from post impact of de-monetization, impact of GST implementation, government policy decision to upgrade the technology by the automobile sectors and other controls imposed on businesses leading to supply side shocks. One of the reasons that contributed to this state is also thousand of crores financial assistance extended for various skill-development programs that remained unproductive and caused stress in the banking sector .Even the reports say that the credit off take during the year 2019-20 will be the lowest from banking sector in the last five decades. f sc . The necessity is to learn a lesson from the past actions and decisions and initiate reforms that help and support the growth process.

There are mainly four contributors to economic growth i.e. domestic consumption, foreign consumption or exports, private investment and government spending. Therefore, all efforts should lead and emphasis for strengthening all the four pillars of the economic growth. The prime need is to create demand for the products and services from within the country as well through exports. People at large should have greater confidence in the economy and come out of fear. This will automatically augment the demand. There are two more crucial areas where utmost attention of the government is called for. One, systematizing and institutionalizing, the start ups and skill development programs in true spirit where they could contribute to the growth of the economy by establishing and make the entities operational to produce and second, creating newer job opportunities for the youth in large number. One has to be optimistic but at the same time cautious to plan, implement and monitor the relevant aspects closely.

Prof. Kanhaiya Singh