India’s economy has seen the biggest decline in the last 40 years. According to the data of the economy released yesterday, India’s GDP has come down to -23.9%, which has increased the risk of recession in India’s economy even more. The biggest challenge before the government is to save the Indian economy from recession.
If the economy’s growth rate remains at minus two for two consecutive quarters, then the recession is officially considered.
The same experts are hoping that India’s growth rate is likely to remain in minus even in the coming quarters. At the same time some experts are saying that India will have a growth rate of minus a whole year. In such a situation a new problem has arisen in front of the government. Although experts were already saying that India will have a growth rate of minus. But no one expected it to be so much.
Which areas of Indian GDP were the biggest decline
India’s GDP growth rate was -23 percent. Which is the lowest in the last 40 years. In such a situation, you can easily assess the economy of India.
If we talk about the biggest decline, then it was in the field of construction. India’s GDP growth rate in construction sector was -50%. Manufacturing sector was at the second place. Where GDP growth rate was around -39%.
If we talk about any silver lining, then that area is agriculture. While the GDP growth rate was 3.2%. The situation of the Indian economy can be gauged that in the coming times, there is a chance of India’s becoming that the GDP growth rate will remain in minus all year. In such a situation a new difficulty has arisen in front of the government.
No statement has yet come about GDP growth figures.
Fiscal deficit reached beyond target
The second challenge facing the Indian government is the fiscal deficit. After the setback to GDP, the deficit figures from the state are also not good. In the first two quarters, the fiscal deficit has reached 103% of its target.
Here I will give you an example. Suppose the government fixed a loss of ₹ 100 for the fiscal deficit for this year. But now it has a loss of ₹ 103. Whereas only two quarters have come. And two quarters are yet to come.
In such a situation, some steps will be taken by the government to reduce the fiscal deficit. It is unlikely. Because the falling GDP has pulled the government’s steps towards the fiscal deficit.
The government had released an economic package of 2000000 crore rupees due to Corona virus, due to which there has been an increase in the fiscal deficit in India. In the coming time it may see even more growth, it will have additional impact on the Indian economy.
How GDP affects the life of common man
When GDP figures were released and stated that India’s GDP growth rate is – 23.9%. So you must have wondered what difference it is making to me? But GDP directly affects the common man.
If the GDP growth rate stays in minus, then you get less subsidy from the government. And fewer facilities are available. The government imposes new taxes on you. So that he can get his income.
To raise the economy, the government allows the fiscal deficit to increase. This puts pressure on the economy. And then it directly affects you. Expensive petrol diesel is also a consequence of.
In such a situation, to think that GDP growth rate will not affect you. This is the wrong thing. If the GDP growth rate remains low, the purchasing power of the rupee also decreases. She goes. This will also affect your affordability.
Stock markets will continue to decline. This will affect your savings. And the investment that you have made will see low returns. In such a situation, the GDP growth rate directly affects your life.
Government spent money in relief package in wrong place
To save India’s GDP from the effects of Corona virus, the Modi government had released a relief package of Rs.20000 million. When this relief package was released. Then the express had said that India’s economy is not going to benefit much from this. And now this is clearly visible in GDP figures.
Much of the focus of the Modi government was to revive industries and provide relief to them. Modi government gave 150000 crores rupees to industries under relief package. In such a situation, his production increased. But demand continued to remain weak.
Till the government will not give direct case benefit to the people at the lower level. Till then the economy will see some kind of boom! It is unlikely! If the government had put Rs. 150000 crores directly into the common man’s pocket, it would have increased the demand in the economy. And the economy could also rise. But the government has missed this opportunity.
Experts are hoping that now the government is not in a position to give any type of cash benefit to the common man. Because now even the treasury of the government is almost empty. The continuously falling GST collection has increased the difficulties of the central government even more.
India is second largest decline in GDP
The Indian GDP keys are going through a difficult period. You can guess from this that India’s GDP has become the second fastest declining GDP in the world. If we talk about the fastest GDP decline, then it was the GDP of the United States.
America’s GDP saw a decline of about 32%, followed by India where 23.9% fell. It is followed by the European countries France Spain and Britain.
If we talk about China’s neighboring country, then the growth rate there was positive, and the growth rate was 3.2%. In such a situation, China’s figures are astounding the world. Experts are also questioning the data released by the Chinese government. He says that it is not possible that China’s GDP growth rate is positive. For information, let us know that the corona virus was first spread from the city of Wuhan in China.
At the same time some experts are also blaming StreetG for the Chinese virus behind this growth rate. China did not carry out a complete lockdown in its country. China implemented lockdowns only where the corona virus was affected. The rest of the economy continued at the same pace. As a result, the Chinese economy managed to achieve positive growth rates.
What is an economic depression
When the country’s economy grows in – for two consecutive quarters, it is officially called the economic downturn.
The last time when India’s growth rate was 3%, Nirmala Sitharaman said that the country’s economy is growing at the rate of 3% right now. In such a situation, it cannot be called an economic slowdown, according to the Finance Minister, when the economy of India will come in – then you can call it an economic recession. According to this, according to Nirmala Sitharaman, there has been an economic slowdown in India. But it has not officially arrived yet.
Experts are hoping that the GDP growth rate in the country may remain in the minus even in the next quarters. In such a situation, India can officially enter the recession.
What are the reasons for the economic slowdown?
Like India, Semi Lok Down was not imposed due to Corona virus like China. Rather complete lockdown was imposed. This completely shut down the country’s economy. And India moved towards economic recession.
But Corona virus alone is not responsible for the GDP growth rate in India. There are many reasons for this. Due to which the GDP growth rate in India was in minus. Demonetization was first implemented in India. This almost brought India’s economy to a standstill. GST was implemented soon thereafter.
GST was seen as a tax reform. And from the central government it was said that this is a game changer rule for the Indian economy. But GST was not implemented properly. And even today people are disturbed because of GST. Some people say that they still do not understand GST.
Due to repeated changes in GST, the problems of people are increasing continuously. This has put increasing pressure on the Indian economy.
If you look at the results of the quarters before Coronavirus, then there was a steady decline in India’s GDP growth. India’s GDP growth fell to 3% from 8%. In such a situation, you cannot blame Coronavirus for the decline in GDP.
What is the future of Indian GDP
If we talk about the future GDP of India, it can become even more difficult for it in the coming days. However, the declining international prices of petrol and diesel have given some relief to the Indian economy. But the time is not going to be easy for India’s economy at all. India’s growing young population has increased the difficulties of the central government even more. In the coming times, the government will have to increase the government expenditure drastically for this growing population. And this will put pressure on the Indian economy.
In such a situation, it is not going to be easy for the Indian economy to get out of recession right now. Experts are hoping that by 2030 most of India’s population will move towards old age. After this, the Indian economy will see slopes. In such a situation, the government has only 10 years left to lift the Indian economy. If this time is lost in India, then there is little hope of growth in India’s economy in the coming days.
What can the government do to raise India’s GDP?
To raise India’s GDP, the government had released a relief package of Rs 2000000 crore. But this relief package was not implemented properly. Because of this, there is no benefit at the ground level.
Even if this relief package is very large in figures. But in reality, few people have benefited from it. This did not generate demand in India’s economy.
Now, if the government has to raise the GDP of India, then government spending will have to increase drastically. However, it may also see a huge increase in fiscal deficit in India. This may put additional pressure on the Indian economy. On the other hand, the continuously declining GST collection is increasing the difficulties of the central government. In such a situation it will be interesting to see how the Indian government now increases its government expenditure.