Indian Economy, It’s Main Crisis

Arif Rashid Malik
When we talk about the development and prosperity of a worldwide countries, we must take this thing into cognizance that how economically strong they are. On the basis of the strong economy, countries can take serious initiatives for the welfare of their respective citizens. So, it means a strong economy is the guarantor of the security of citizens in ways. One way is simply this, our education system (both curriculum and co-curriculum) will be better and will have more opportunities for students in terms of employment and will serve in a far better way to our health sector. Life expectancy too will be better only if the economy of a country is in control. Hence the strong economy is the foundational base of any country. Every economy in a world has a shock bearing capacity, the world is facing economic crisis right now so is India. When India became independent, it was decided that India will follow planned economy and it will regulate each and every thing according to the already economy planned pattern. The focus was more on public sector rather than private sector. The main aim was to eradicate poverty in India and to make India prosperous and developed. But the plan didn’t work because of the “Hindu growth rate” that is why GDP remained only four percent in India. Till 1990, there was huge chunk of population in India; those mostly were living below poverty line. Liberalization, Globalization and privatisation model was followed in India after 1990.There were two main reasons for it, one was the disintegration of the U.S.S.R. and also there were crisis of foreign exchange. Once the “Openness “was introduced in economy of India ,then not only growth rate spiked ,but also it increased its .G.D.P. (Gross Domestic Product) and also reduced poverty to large extent. Since, then, it has seen many ups and downs in growth rate. While India’s G.D.P. growth rate was 8.5% in 2010-2011 and in last three years of UPA’s government slipped to 5.24%, which is the lowest in the 2nd term of Manmohan Singh’s.
The only option for the govt.to make this lockdown successful is to fulfil the needs of its citizens (especially for those who can’t afford to stay at home to see the catastrophe).Covid-19 is a big challenge for India when it comes to import and export, because the corona have badly destroyed the economy of those countries who are not only its( India’s) main trade partners but also India’s trade with them is in trillions and they are investing in India in large numbers.
The average GDP growth rate during former PM’s tenure was 6.67% overall. The growth rate of India during the beginning years of Modi’s led BJP government was around 8.4%.After demonetization, Indian economy continued to progress but there were many flaws which continuously led the decline in India’s GDP rate. Shortly after announcing demonetisation (after 7 months), another faulty experiment was done by govt. to introduce Goods and Services Tax (G.S.T). The main aim of Demonetization was to confiscate all the black money that had been deposited in various banks illegally. According to RBI, the elites have deposited more than 3 lakh crores worth of black money in their bank accounts. Though this helped the govt. to slow down the plague of parallel economy and make Indian economy “Cashless economy”. But according to Labour Bureau’s Sixth Annual Employment Survey, the unemployment rate increased in last four years high -in 2016-2017, when the old currency notes were demonetized by the govt. In 2017-2018, unemployment rate in the country was forty five years high that is 6.1% and the unemployment rate right now in India is more than 20%. Between 2016 to 2018, there were around fifty lakh people who lost their jobs and the Labour force participation also got declining from 2016 September to December 2018 both in rural and as well as in urban areas. It was predicted that the growth rate will decline from 7.3%to 5.8%in 2017 -2018.and right now it’s around 4.5% and will decrease more because of the current circumstances ( of Covid-19). GST (Goods and Service Tex) has also adversely affected the economy of India from various ways. When there was no GST in the country at that time the economy growth of country was very high. The Indian economy was growing around eight and half but the growth rate of economy fell down very sharply and it was reduced to 5.7%, once G.S.T. was introduced in the whole country. There were some lethal consequences on the poor people mostly because when it comes to pay the tax there isno difference between a Proletariat and a working class (both groups have to pay the same amount). The tax rate has been very high after introducing G.S.T. that is 28%.India has the second highest tax rate in the world, that is not fare and still there are 29.9 %of population that are living below poverty line and inequality in income is very high. In India 20%of population are holding more than 50%of wealth of country and due to this imbalance, there has been an increase in unemployment rate as well. Covid-19 is one of the formidable and onerous challenge for the economy of India from various angles. Indian economy is already reeling because of the slow growth rate and covid-19 will struck it naturally and will decline the growth rate of Indian economy further. So it means simply this that we can’t say it with certainty to what extent it will decline because it depend fundamentally on two things. One is simply this, to what extent it can be contained by India. Secondly, how the other countries of the world will discover a vaccine for the deadly Corona Virus to overcome from this dreadful global pandemic. In spite of the fact that the lockdown in the country like India is the best option to save the precious lives of people. At the same time, govt. has to take care of each and every citizen right now very seriously, especially of those who are living in abject poverty and who are not getting anything to eat for their survival during these difficult times of the nation. The working class people got nothing to do but to stay at home and wait for some miracle to happen (from the government). Everything is closed because of the lockdown; lockdown policy adopted by Govt. for longer period will be successful only when govt. will provide welfare measures to everyone in the country. The only option for the govt.to make this lockdown successful is to fulfil the needs of its citizens (especially for those who can’t afford to stay at home to see the catastrophe).Covid-19 is a big challenge for India when it comes to import and export, because the corona have badly destroyed the economy of those countries who are not only its( India’s) main trade partners but also India’s trade with them is in trillions and they are investing in India in large numbers. The one more big challenge for the Govt. will be to provide jobs to those who are losing it (especially from the private sector).
(The writer is a student at P G Department of Political Science at University of Kashmir. Views are his own, [email protected])