Living in an unpredictable world where the US and China are leading the world markets. Addressing the nation from the ramparts of Red fort on 73rd Independence day, Prime Minister Modi dreams of $5 Trillion economy. Prime Minister’s ambitious target was reflected in the recently released Economic Survey & Union Budget. Analyzing India’s current situation & coronavirus outbreak this target set by PM is hard to achieve but not impossible. To attain this target our GDP needs to grow over the next few years. The required rate of growth to achieve that level is in excess of 9% per annul.
India is one of the fastest-growing economies in the world with one of the highest youth population .GDP growth is pegged at 6-6.5 % in 2020-21 up from 5 % in 2019-20(Economic survey 2019-20). Creation of new firms has increased drastically since 2014. More than 50 % of the workforce is in the agriculture sector. As per govt. plans, farmers to become exporters from bare producers. Govt has planned to invest vast on agricultural infrastructure. A 10 % increase in registration of new firms. The Economic Survey pointed out high drop out rates at various levels of schooling and lack of affordability in higher education as areas of concern. Barely 2 % of the Indian population pays Income tax. The present fiscal deficit remains at 3.5% of GDP. Currently, rupees stand at 76.54 to a dollar. Despite this mixed data it very tough declaration to intend to become $5 trillion economy.
India stands at 63 among 190 countries in ease of doing business released by world bank. It takes as many as 36 approvals are needed to open an eatery in Bengaluru which shows why we are so behind in the ranking. This also reminds us of license Raj during Nehru time. Unemployment is in degrading trend with an all-time low. Infrastructure is another major concern, Our weak infrastructure needs major upgrade especially in places like Northeast which has high potential to affect our GDP. India has a huge population to provide education, health & food security which is a very difficult task & needs a good plan with proper management. The degrading environment all over India puts pressure on existing resources. Proper Implementation is still a big problem we are facing. Every year Govt. announce new plans & strategy but we don’t know how many people are benefited from the schemes. Corruption of ministers, bureaucrats in major schemes is the root cause that many people are still out of reach of schemes that are announced every year. Women’s participation is low in our country compared to the world average. There were many other parameters like fake news, rumors that have an indirect effect on the Indian economy.
Nirmala Sitaraman presented the Economic survey 19- 20 on 31st January & union budget on 1st February where she highlighted several plans of the government to be taken. The budget is woven around 3 prominent themes- Inspirational India, Economic development & Caring society. Govt had decided many Fibre to the Home(FTTH) connections through Bharatnet that will link gram panchayats this year policy to enable the private sector to build Data center parks throughout the country will be brought soon.100 more airports would be developed under the Udaan scheme. More than 2.83 Lakh crore will be spent on agriculture development. On education & skill front 99,300 crores have been allocated. India’s government has tried to stem the slowdown with a host of measures, including tax cuts and cash injections for the banking and automobile sectors.
Effect of coronavirus on Economy
On 31st December while we were welcoming New year, a deadly virus COVID-19 emerged in the city of Wuhan, China. No country ever wondered this could have such a harsh effect all over the world. More than 3,50,000 cases with 15,415(till now) deaths are being reported.500+ cases have registered in India till now. Most of the Indian states have gone in complete lockdown with trains, metros and inter-state buses have been shut. Many states have sealed their borders. Sensex plunges the biggest single-day fall. On the BSE, 2,037 companies declined, while 232 advanced. Investors in India suffered a huge loss due to this disease & fear that it can destroy the economy. The travel industry has been badly damaged. Currently, all trains, flights service remains suspended. There is a pay cut to the employees of these sectors. The next hard-hit sector is Tourism, no International flights are being allowed to land on Indian soil. With tourism restaurants, chains are being closed. Many heritage sites including the Taj Mahal is currently closed. These are further slowing the Indian economy. Indian govt. Has ordered work from home so the demand for high-speed internet has increased & many telecom operators launching new plans. Automobile manufacturing has been stopped by many companies. However, a company like Reckitt Benckiser(manufacture dettol) saw a huge increase in sales of sanitizers & soaps. To some relief Govt. has put sanitizers & mask in essential commodities & capped its prize. Coronavirus soon needs to tackle if we want to make $5 Trillion economies possible.
Every year the Union budget is out & money is allocated to different sectors but still, we are behind the projected rate. This may be due to corruption or improper implementation or any other reason the Indian economy gets affected.Huge money is allocated to education & health. Still, the condition of these sectors is not improving. While some states performance is not up to mark some states like Kerala, Karnataka is performing well. We can see these states working model & implement it in other states but we are busy discussing in a useless political issue. Recently Yes Bank crises had put the huge burden in banking sectors and the major question arises ,Are money in banks safe? What was RBI doing? As India feels the pain of coronavirus outbreak, India’s economy further downshifts. With lockdown all over the country, India has to bear a huge financial burden due to this disease. Globally, the coronavirus shock is severe even compared to the Great Financial Crisis in 2007–08. Indian policymakers have to plan accordingly in this time of shutdown & make effective plans further if we still want $5Trillion economy.
This post is contributed by Asthanu Madhav