DMPQ- Recent data suggests that Indian economy has been slowing down. Evaluate the reasons responsible for slowdown.

. India’s economy toppled to 5 per cent GDP growth rate—a 25-quarter low—during the first quarter of 2019 fiscal. Days before the data was published, the government took a step back to announce rescue measures to revive the sectors hurt by the economic slowdown and reverse decisions on surcharge for high net-worth individuals. The finance ministry’s stimulus package was aimed at addressing two main concerns of the Indian economy—fall in consumption and private investments.


The one-time cash curtailing exercise of the government had a telling impact on India’s growth. “We would come to know about the true impact of demonetisation only after some years,” Arvind Subramanian, former chief economic adviser who had shepherded the demonetisation move of PM Narendra Modi, had said while announcing that demonetisation had no short-term impact on the economy.

Consumer demand slump 

One of the main concerns for the current economic slowdown is a sharp fall in consumer demand as witnessed by most major firms. India is still a rural-centric economy, the proof of which was witnessed this time. As the rural economy slowed, tractor manufacturers and fertiliser manufacturers felt the first impact.

Real estate slowdown 

Of all the things that hurt India’s GDP, a slow down in the real estate and construction sector have had the worst impact of all. The construction and real estate sector, credited to account for 40 per cent overall jobs, had seen the worst last four years, with business being slower with each passing year.

Lesser jobs 

A drop in number of employment and wage levels have hastened the slowdown and the slump in consumer demand. Fewer jobs have been reflected in the Periodic Labour Force Survey (PLFS) for 2017-18 by the National Sample Survey Office. It also recorded a mere five per cent rise in regular jobs, which provide more social security.


Leave a Reply