India is now in the midst of a significant economic slowdown. India’s rapid economic expansion in recent years has lifted millions of people out of poverty. It is not only Indian’s who are suffering – the Indian government too.Even as the Indian governments economic mismanagement is responsible for much of the slowdown, it has itself fallen victims to these blunders.As the economic slowdown exist ,there is a chance for recession.The government should take necessary actions to cure this economic slowdown.
Let’s take a closer look at 5 reasons why the economy is slowing down .
- Decrease in consumer demand in market
Consumer demand in market has declined in a large amount. Demand for the product and services has fallen.When there is no demand supply has to be stopped due to pilling up of stocks and productions units go idle, leading to cut in labour force.It further reduces the income leading to less demand and further reduction in supply and stopping of production. It’s such a big vicious circle.
Automobile industry is one of the largest industry that gives employment to about 3 crore people in India. Here we can see the largest decline.Nowadays, sales of the automobile industry is in a bad condition. Almost all the companies are facing negative growth in this industry. Almost all the companies are unable to sell products. When the demand falls ,companies would definitely cut their cost.If their sales are very low, they would cut their labour force and close their factories.Thus the fall in price and investment would affect the economy in a bad way.
2. Investment Decline
A lot of people has invested their money in the stock market.As the stop market crashes, many people lost their money and their confidence to invest in the stock market.There happens a large decline in the investment scenario.After the coming of the Modhi government, within 50 days about 12 crore rupees lost for the stock market investors. It really shows the economic slowdown.
3. Job losses
Unemployment is increasing day by day. The reason for the fall in the consumer demand and other issues are due to the job losses. Due to the negative losses in the automobile industry, about 3.5 lakh people lost their job. In 2017 ,the unemployment rate was 5%, but now it has increased to 7.2%. Thus we can notice an increase in the unemployment rate which really causes the economic slowdown.
4.Low GDP Growth
GDP is always used to measure the economy. Even our government tries to increase the rate of GDP ,the decline in the growth of GDP really affects the economy.Our government reveals that our GDP rate is 6-7% ,but the International organisations like IMF and World Bank declared that the GDP rate of India is overestimated.Our Indian economy has the GDP of less than 6%. Another fact that we can relate to GDP decline is the position of the economy . Once, Indian economy was the 5th largest economy in the world, but now it has fallen to the 7th position.
5.Decline in the value of money
The value of money has decreased against the US dollar.It is one of the biggest indicators of the economic slowdown.Even there is a fall in the exports too. Fall in the exports and the decline in money value are not good for the economy.
Other reasons for the slowdown of economy are demonetization,GST implementation and problems in agricultural sector, increase in interest rate, monsoon phenomena, etc.Most of the problems are government related, some are global problems, individually related problems ,natural phenomena that we couldn’t control. Only correct government reforms should find the solutions.Policies that focus on education, employment, economy and the reforms that leads to progress in economy and business can solve this issue to a great extent.
BY: KAMEELA RESMA
I BA ECONOMICS
Dynamic technologies 