So the fear that many experts about Economics and Indian Economy was fearing became reality. Yesterday on 31st august when GDP data was published by National Statistical Office . It showed that in the April-June quarter of 2020-21 GDP contracted by 23.9% compared to growth of 3.1% in the previous quarter.
Among the G7 countries UK’s economy contracted by 20.4%, France by 13.8% only India’s Northern neighbour China saw a growth of 3.2 %. Few days ago Indian Economic minister Nirmala Sitharaman said that crisis in Indian economy is due to ‘Act Of God’. Actually she was blaming this Covid-19 pandemic for the crisis but Indian economy was slowly drooping before the pandemic also. Now due to Corona it is on a verge of recession.
According to NSO Mining Sector Contracted by 23.8% , Manufacturing Contracted by 39.3%, Construction was contracted by 50.3% ,Trade-Hotel-Communication saw a 47 % contraction, Financial sector saw a contraction of 5.3%, Public Administration & Defence saw a contraction of 10.3%. Only silver lining showed by Agriculture Sector. It saw a growth of 3.4%.
For the past few times the sign was clear as Tax collection by Goods and Services Tax was down by 46%. Due to this the centre cannot able to pay the taxes that should be given to the state. On October-December quarter Rural economy and Farmers income got 14 year low. 11 million people Lost jobs in 2018 according to CMIE. When there was corona no where. Index of Industrial Production recorded a 4.3 % contraction on October 2019 which is lowest since 2012. According to NSSO Unemployment is 45 years high now.
Now why this type of bad situation of the economy happened before the pandemic came to the country?
One of the reason is Low consumer confidence it indicates the Economic security among the public is decreasing. If people are not sure about the future they will spend less if their is less spending it will generate less demand ,less demand will generate less production automatically the Market will be contracted. It has badly affected our economy.
In the last few years we did not saw a big investment coming in our country. Their is a big amount of tax debt in our country. Investor wants social and religious harmony among the people where they are investing so the peace helps their business to grow. They want to avoid tax terrorism that is in many parts of our country. So ideal environment for business is still deficient in our country so big investors are not getting the confidence required.
Why corona hit our economy so badly?
Central Government should have gave the power of enforcing lockdown. When the Nationwide lockdown was enforced there was small number of cases many states had then no confirmed cases but centre enforced lockdown there also. Mainly this is due to the fear of do much population density in our country. Not having medical facility for facing the pandemic. But staggered Lockdown would have made much less damage to our economy.
But what happened is a part of history now government should think about reviving our economy in the near future by consulting economic experts. And change their policy according to need.
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