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​Know where the Indian economy stands amid the global economic slowdown?

Friday - October 11, 2019 3:09 pm , Category : WTN SPECIAL
The Indian economy affected by recession
The Indian economy affected by recession

Global slowdown impacts negative effect on GDP growth rate

OCT 11 (WTN) - Merchants waiting for customers in their shops, or silently in the showrooms of vehicles! These are signs of the global economic slowdown, which has affected the Indian economy to a great extent. However, customers are not seen in shops from villages to metro cities, because online shopping sites have slowed down the business from small shops to malls. But the silence prevailing on the showrooms of the vehicles shows clearly that India is in the grip of the global economic slowdown. The lipstick index and men's undergarments index are also pointing to the fact that the Indian economy is moving like turtle due to recession.

However, India is not the only country which is affected by the global economic recession. But fast-growing economies such as India and Brazil see more impact of the economic slowdown. It is not that the Modi Government is not taking any measures to deal with the recession. From giving relief to the corporate sector, many other measures have been taken by the Modi Government to give a boost to the country's economy. At the same time, the Reserve Bank of India has also given relief to banks by reducing interest rates. But despite all this, India cannot remain untouched by the global economic slowdown due to open economy.
 
The GDP rate of any country is an indicator of the economic growth of that country. Estimates of GDP growth rate of the current financial year are changing from time to time due to recession. Recently, Moody's Investors Service has lowered India's GDP growth rate from 6.20 per cent to 5.80 per cent for FY 2019-20. In this regard, Moody's says that the Indian economy has been affected by the economic slowdown, so the GDP growth estimate has been revised. In addition to Moody's, the Reserve Bank of India (RBI) recently lowered the GDP growth estimate to 6.10 per cent after the recent monetary policy review meeting (MPC).
 
The global economic slowdown has affected the Indian economy quite recently, and it is being said that it will have long-term consequences. However, experts of the Indian economy say that the reason for the slowdown in the Indian economy is the lack of investment, which later became effective in consumption due to the softening in employment generation and the financial crisis in the rural sector.
 
However, experts believe that the Indian economy is so strong that it can be affected by the economic slowdown, but cannot derail. It is being said that by the month of June next year, there will be more impact of the economic slowdown and after that it will gradually decrease, after which the economies of the world including India will start picking up again. According to Moody's, India's GDP growth rate will subsequently accelerate to 6.6 per cent in FY 2020-21 and around 7 per cent in the medium term.
 
According to experts, since the global economic slowdown has affected the Indian economy, it is expected that the real GDP growth and inflation will be slow for the next two years. That is it is clear that due to slowdown and inflation, there is a possibility of negative impact on GDP growth rate. If compared to the situation two years ago, the GDP growth rate is expected to remain at 8 per cent or more.
 
Apart from the Reserve Bank of India and Moody's, the Asian Development Bank (ADB) has also lowered India's economic growth forecast. Rating agencies Standard and Poor's and Fitch have also cut their GDP growth forecasts. Talking about Moody's, it has estimated the fiscal deficit to be 0.40 per cent higher than the government's target due to corporate tax cuts and low GDP growth rate. According to Moody's, the fiscal deficit is expected to reach 3.70 per cent in this financial year.
 
According to experts, the 5 per cent increase in real GDP according to international standard is relatively high due to the economic slowdown, but it is less in the context of India. For your information, let us say that due to a significant fall in inflation in recent years, the growth rate of nominal GDP has fallen from about 11 per cent in the last decade to around 8 per cent in the second quarter of 2019.
 
But the impact of the economic downturn is badly affecting the Indian economy and especially the auto sector. However, for the last two months, the Modi Government has made a lot of efforts to overcome the economic slowdown of the country, and for this many big decisions have been taken by the government, including cuts in corporate tax. But despite these efforts of the government, the auto industry slowdown continues.

If we talk about the month of September, then the sales of cars have decreased once again in this month. According to the data, sales of passenger vehicles have fallen by 23.69 per cent in the month of September, while the sales of commercial wheelers have been reduced by 62.11 per cent.
 
That is the statistics are clear that the economic slowdown has affected the Indian economy quite well, although the Modi Government is taking a lot of steps at its level to deal with the recession, but since the recession is global, it is bound to take time to reduce its impact and then end. According to experts, the Indian economy will recover from the economic downturn over time, but it is difficult to say how much time it will take and how much damage it will do to the Indian economy.