Four months from now, the financial year 2019-20 will come to an end. Eight months have already passed with such a fall in the GDP growth rate that all our hopes have been shattered. Slowdown in the Indian economy cannot be reversed in near future. The country cannot realize the budgeted GDP growth rate for this year. The fall in GDP growth rate has touched a new low at 4.5 per cent in the second quarter as against 5 percent in the first. It is worst after 2012-13 when the base year was changed for the new series of the data. The average growth rate in the first six month is thus merely 4.75 per cent, and then in the last two months, the economic and financial crises have signalled a further decline.
The present slowdown in the economy has been attributed chiefly to fall in domestic consumption and demand. It fell because there is shortfall of money with the people, which in turn is the result of joblessness which is 45 years high.
The more worrisome factors are slowdown in private consumption, investment, and export. There is short supply of money, lack of credit to the producers to produce goods mainly due to banking crisis and lack of demand in the domestic market has created a condition in which companies are forced to lower their production level. No industry is working at their full capacity. What to talk about the private companies, even government companies like BSNL have to shed its strength in the last two months by about one lakh. Both production and sales are under pressure, and public spending is running out of room due to poor tax collection.
Modi Government has taken a slew of reforms in the recent months to boost the economy for reversing the slowdown, which included steps to improve credit in the market focusing on offering incentives to banks to increase lending, several measures of tax reduction to corporates, super-rich surcharge imposed on foreign investors were withdrawn, exemptions were granted for start-ups from angel tax, infusion of Rs 70,000 crore in public sector banks, setting up a special real-estate fund, merging several banks, announcing the biggest privatization drive in more than a decade etc. Even RBI has slashed lending rates of banks five times this year. However, all have proved insufficient to handle the crisis. Experts and analyst are of the view that the government did not do enough to address the issue of slowdown in domestic demand which is displaying chronic weakness.