In just a few years, India has gone from being one of the world’s fasting – growing economies of the world.An economic slowdown occurs when the rate of economic growth slows in an economy. Countries usually measure economic growth in terms in Gross Domestic Product (GDP), which is the total value of goods and services produced in an economy during a specific period of time.
The Indications of the Slowdown
. The slowing growth of GDP is a indicator of economic slowdown. GDP/Gross Domestic Product is the sum of private consumption expenditure, investment, government expenditure, and net exports.
. “GDP can be thought of as a measure not so much of size…….it measures the movement of money through and around the economy; it measures activity” – John Lanchester.
. Drop in automobile sales: The production in the top 5 firms in India has dropped by about 30% compared to last year.
. Drop in fast moving consumer goods sector: Compared to 2018, the sector’s growth fell by about 9.7% in the rural area. This is a sector that has demand even during the poor economic performance as these constitute basic necessities like toiletries, OTC medicines, etc
. Performance drop of the core industrial segments like coal, steel, cement, etc.
. Industrial output drop: The sector had recorded a mere 2%growth in output.
. Rupee drepreciation: Rupee value is at a 9 – month low. It is estimated that it may plummed to 73.5 by the end of September 2019. It has weighed on India’s key exports like.
. Foreign portfolio investors pulling out of investment in India. These investors have been selling spree especially after the budget presentation that call for taxing foreign investors that operating using ‘trust’ structure. The investors had pulled out 2,881 crore INR during just two sessions of August.
Causes for the Present Slowdown in the Indian Economy
–>The Effect of Demonetization
Indeed, Demonetization can be said to have contributed too much of the slowdown as the Double Whammy of demand collapsing, and supply bottlenecks mean that there is a broad slowdown across the entire value chain of the demand and supply dynamics.
It is also a fact that this has contributed to a freeze on investment by industrial houses and corporates who are now paying down the debt or postponing debt repayments to ensure that their present cash flow is sufficient to remain in business.
–>Too Much Debt
Added to this is the fact that most Public Sector Banks are saddled with high NPAs or Non Performing Assets that have resulted in them tightening lending and instead, seeking deposits and otherwise repairing their balance sheets by making provisions for Bad Loans.
–> Rollout of GST
Fourth, the fact that the rollout of the GST or the Goods and Services Tax on a nationwide basis has led to the slowdown cannot be denied.
Indeed, GST has hampered the small businesses more than Demonetization by forcing them to withhold inventory until they migrate to the GSTN or the GST Network and become compliant with the numerous rules and regulations that are part of this tax.
–> Global Slowdown
It is not these factors alone, and the most important factor is that there is also a global economic slowdown that is happening and given the fact that India is a net commodity exporter, there has been a slump in the volumes of exports.
–> Retreat of Globalization
Hence, what the slowdown means for professionals and fresh graduates is that they would be finding it harder to land jobs as well as see their salaries rise year on year basis. In addition, the policies of the Trump Administration have contributed to a decline in the number of students and professionals going to the United States and added to this, Brexit uncertainties have compounded the situation.
ALEENA K J
I BA ECONOMICS
Dynamic technologies 