• Friday, August 7, 2020

How serious is India's economic slowdown?

Discussion in 'World Affairs' started by Chakar The Great, Sep 15, 2019.

  1. Chakar The Great

    Chakar The Great SENIOR MEMBER

    Messages:
    3,728
    Joined:
    Apr 25, 2018
    Ratings:
    +0 / 1,168 / -0
    Country:
    United Kingdom
    Location:
    Ireland
    Top Indian government officials are engaged in a vociferous public debate over the state of the country's economy.

    Rajiv Kumar, the head of the government's think tank Niti Aayog, recently claimed that the current slowdown was unprecedented in 70 years of independent India and called for immediate policy interventions in specific industries.

    The Chief Economic Adviser, K Subramanian, disagreed with the idea of industry-specific incentives and argued for structural reforms in land and labour markets. Members of Prime Minister Narendra Modi's economic advisory council sound inchoate, resorting to social media and opinion editorials to counter one another.

    In essence, the quibble among the members of the economic team of Mr Modi and his government is not about whether India is facing an economic slowdown or not, but about how grave the current economic crisis is.

    This is a remarkable reversal in stance of the same group of economists who, until a few months ago, waxed eloquent about how India was the fastest growing economy in the world, generating seven million jobs a year.

    To put all this in context, it was less than just two years ago, in November 2017, that the global ratings agency Moody's upgraded India's sovereign ratings - an independent assessment of the creditworthiness of a country - for the first time in 14 years.

    [​IMG]Image copyrightGETTY IMAGES
    Image captionSales of cars and SUVs have slumped to a seven-year low
    Justifying the upgrade, Moody's had then argued that the economy was undergoing dramatic "structural" reforms under Mr Modi.

    In the two years since, Moody's has downgraded its 2019 GDP growth forecast for India thrice - from 7.5% to 7.4% to 6.8% to 6.2%.

    The immediate questions that arise now are: is India's economic condition really that grim and, if yes, how did it deteriorate so rapidly?

    [​IMG]
    Read more about the Indian economy
    [​IMG]
    One of India's most celebrated entrepreneurs, the founder of the largest coffee store chain, Café Coffee Day, recently killed himself, ostensibly due to unmanageable debt, slowing growth and alleged harassment by tax authorities.

    The auto industry is expected to shed close to a million direct and indirect jobs due to a decline in vehicle sales. Sales growth of men's inner wear clothing, a key barometer of consumption popularised by former Federal Reserve Chair Alan Greenspan, is negative. Consumption demand that accounts for two-thirds of India's GDP is fast losing steam.

    To make matters worse, Finance Minister Nirmala Sitharaman presented her first budget recently with some ominous tax proposals that threatened foreign capital flows and dented investor confidence. It sparked criticism and Ms Sitharaman was forced to roll back many of her proposals.

    [​IMG]Image copyrightGETTY IMAGES
    Image captionIn 2016, India withdrew 85% of all currency notes from the economy
    So, it is indeed true that India is facing a sharp economic downturn and severe loss of business confidence.

    The alarm over the economic condition is not merely a reflection of a slowdown in GDP growth but also the poor quality of growth.

    Private sector investment, the mainstay of sustainable growth in any economy, is at a 15-year low.

    In other words, there is almost no investment in new projects by the private sector. The situation is so bad that many Indian industrialists have complained loudly about the state of the economy, the distrust of the government towards businesses and harassment by tax authorities.

    But India's economic slowdown is neither sudden nor a surprise.

    Behind the fawning headlines in the press over the past five years about the robustness of India's growth was a vulnerable economy, straddled with massive bad loans in the financial sector, disguised further by a macroeconomic bonanza from low global oil prices.

    India's largest import is oil and the fortuitous decline in oil prices between 2014 and 2016 added a full percentage point to headline GDP growth, masking the real problems. Confusing luck with skill, the government was callous about fixing the choked financial system.

    To make matters worse, Mr Modi embarked on a quixotic move in 2016 to withdraw all high-value banknotes from circulation overnight. This effectively removed 85% of all currency notes from the economy.

    [​IMG]

    Media captionWhat is really happening with India's economy?
    This move destroyed supply chains and impacted agriculture, construction and manufacturing that together account for three-quarters of all employment in the country.

    Before the economy could recover from the currency ban shock, the government enacted a transition to a new indirect taxation system of the Goods and Services Tax (GST) in 2017. The GST rollout wasn't smooth and many small businesses initially struggled to understand it.

    Such massive external shocks to the economy, coupled with a reversal in low oil prices, dealt the final blow to the economy. Millions of Indians started to lose their jobs and rural wages remained stagnant. This, in turn, impacted consumption, slowing down the economy sharply.

    Not easy
    The wobbly state of the economy has also thrown government finances in disarray: tax revenues are much below expectations.

    On Monday, the government got a much-needed breather when India's central bank announced a $24bn (£19bn) one-time payout for the cash-starved government. (This amount is more than the dividend paid by the central bank to the government in all five years of the Congress rule between 2009 and 2014.)

    The solutions to the economic crisis are not easy.

    Indian industry, fed and fattened with government protection through decades, is once again clamouring for tax cuts and financial incentives.

    But it is not clear that such benefits will revive private sector investment and domestic consumption immediately.

    For all the hype about the Make in India programme, hailed as the harbinger of the country's emergence as a manufacturing power, India's dependence on China for goods has only doubled in the past five years.

    India today imports from China the equivalent of 6,000 rupees ($83; £68) worth of goods for every Indian, which has doubled from 3,000 rupees in 2014.

    India's exports have remained stuck at 2011 levels and not grown.

    So, India is neither making goods for itself nor for the world.

    [​IMG]Image copyrightAFP
    Image captionIndia's agrarian crisis is a major stumbling block
    Ornamental tax and other fiscal incentives to specific industries are not suddenly going to make Indian manufacturers competitive and stop India's addiction for affordable Chinese goods. If any, the trade spat between China and the United States only saw countries such as Vietnam and Bangladesh benefit and not India.

    More currency or trade tariffs are not the solutions either. The central bank has lowered interest rates and there is some push to lowering the cost of capital for industry. But again, Indian industry will invest more only when demand for goods and services increases. And demand will increase only when wages increase, or there is money in the hands of people.

    So, the only immediate solution for India seems to be to boost consumption through a stimulus given directly to people, in the classical Keynesian mould.

    Of course, such a stimulus should be combined with reforms to boost business morale and confidence.

    In sum, India's economic picture is not pretty.

    It is important for India's political leadership to see this not-so-pretty picture and not hide behind rose tinted glasses. Prime Minister Modi has a unique electoral mandate to embark on bold moves to truly transform the economy and pull India out of the woods.

    By Praveen Chakravarty



    Source: BBC news
     
    • Thanks Thanks x 3
  2. Path-Finder

    Path-Finder ELITE MEMBER

    Messages:
    18,477
    Joined:
    Feb 7, 2013
    Ratings:
    +8 / 26,146 / -7
    Country:
    Pakistan
    Location:
    United Kingdom
    #FakeNewj
     
    • Thanks Thanks x 2
  3. hussain0216

    hussain0216 ELITE MEMBER

    Messages:
    14,725
    Joined:
    May 29, 2012
    Ratings:
    +6 / 18,657 / -25
    Country:
    Pakistan
    Location:
    United Kingdom
    In the meantime india is busy with temples, beef, lynchings and NRCs and oppressing Kashmiris

    It's important we hurt India as much as we can during this time
     
  4. Indus Pakistan

    Indus Pakistan ELITE MEMBER

    Messages:
    17,340
    Joined:
    May 7, 2012
    Ratings:
    +192 / 49,281 / -12
    Country:
    Pakistan
    Location:
    United Kingdom
    Honestly, right now if UAE and Saudia even twitched by reducing Indian labour force it would impact the $60 billion remittances bonanaza India recieves every year. That would send Indian economy into a tailspin and crash. They would forget about Kashmir. Wars are not always fought with bullets. But with economics.
     
    • Thanks Thanks x 4
  5. Novice09

    Novice09 SENIOR MEMBER

    Messages:
    2,655
    Joined:
    Oct 20, 2009
    Ratings:
    +1 / 1,817 / -6
    Badi der se samjhe...

    But to the contrary... both these nations are investing HEAVILY IN INDIA... WHY?
     
    • Thanks Thanks x 1
  6. Indus Pakistan

    Indus Pakistan ELITE MEMBER

    Messages:
    17,340
    Joined:
    May 7, 2012
    Ratings:
    +192 / 49,281 / -12
    Country:
    Pakistan
    Location:
    United Kingdom
    Because you are 4th largest Muslim country.

    [​IMG]

    [​IMG]
     
    • Thanks Thanks x 1
  7. Novice09

    Novice09 SENIOR MEMBER

    Messages:
    2,655
    Joined:
    Oct 20, 2009
    Ratings:
    +1 / 1,817 / -6
    Again...
    Badi der se samjhe...

    This is our strength... UNITY IN DIVERSITY...

    And yes, Indian economy is showing signs of illness and can be cured...
     
  8. Indus Pakistan

    Indus Pakistan ELITE MEMBER

    Messages:
    17,340
    Joined:
    May 7, 2012
    Ratings:
    +192 / 49,281 / -12
    Country:
    Pakistan
    Location:
    United Kingdom
    Nope. Stop stealing what belongs to Mother Earth. That slogan belongs to earth.

    upload_2019-9-15_15-11-21.jpeg

    Do you know there are 6 times more Muslims in India then Saudia Arabia? Do you know Mumbai has more Muslims then UAE? Or that Chennai has more Muslims then Qatar? Or that New Delhi has more Muslims then Gaza, Palestine. So being good Muslims as they are, Saudi's are investing billions in India to help their brothers Indians.
     
    • Thanks Thanks x 2
  9. N.Siddiqui

    N.Siddiqui SENIOR MEMBER

    Messages:
    5,457
    Joined:
    Nov 21, 2015
    Ratings:
    +8 / 9,281 / -1
    Country:
    Pakistan
    Location:
    Pakistan

    Even 5% GDP growth looks like a skewed and fudged figure...


    Reality of Indian Economy | GDP Growth Analysis by Dhruv Rathee

     
    • Thanks Thanks x 1
  10. Indus Pakistan

    Indus Pakistan ELITE MEMBER

    Messages:
    17,340
    Joined:
    May 7, 2012
    Ratings:
    +192 / 49,281 / -12
    Country:
    Pakistan
    Location:
    United Kingdom
    On a more serious note has abybody ever done a economic analysis of the economic goldmine that is Saudia/UAE to India? Exactly how many jobs are provided by the millions of Indians working in GCC? Then think of the millions employed in India because of the remittances. From the point of the Indian ex-pat flying back in Indian airlines to airports to taxis to construction in India etc?

    • pilots
    • aircraft technicians
    • aircrew
    • airports
    • taxis
    • housing construction
    • service industry
    • retail
    • etc
    • etc
    And as the $60 billion spins it's way around the Indian economy at every point it gets taxed which goes to Modi's government which gets spent on .............

    Think about that. Now think what would happen if this was chopped off? It's effect would be more devasting then the hell unleashed by Genghiz Khans Mongol hordes.

    @Mangus Ortus Novem
     
    • Thanks Thanks x 2
  11. Novice09

    Novice09 SENIOR MEMBER

    Messages:
    2,655
    Joined:
    Oct 20, 2009
    Ratings:
    +1 / 1,817 / -6
    I know... and I also know that they are free and prospering... they are just like other Indians... with highest population growth rate...
    You are busting Pakistani propaganda...

    They are not investing for MUSLIMS... AMBANI is no Muslim... you need to see THE COMPLETE PICTURE...

    There is a reason we talked about GLOBAL ECONOMY... EACH AND EVERY PERSON IS HIRED AS PER HIS/HER CAPABILITIES... and education, cost, profit... plays a big role...
     
  12. Indus Pakistan

    Indus Pakistan ELITE MEMBER

    Messages:
    17,340
    Joined:
    May 7, 2012
    Ratings:
    +192 / 49,281 / -12
    Country:
    Pakistan
    Location:
    United Kingdom
    Is that why I can't hire a good, hard working, efficient, honest Indian electrician, plumber or a builder at £5 a hour but instead have to find a drunk Pole at £10 a hour in UK. And the Pole can't speak a word of English. Where is the global economy in UK. Is it only for Saudia and UAE employing Indians?
     
  13. Novice09

    Novice09 SENIOR MEMBER

    Messages:
    2,655
    Joined:
    Oct 20, 2009
    Ratings:
    +1 / 1,817 / -6
    Do you want to say that Indians are not working in UK... you might not find a PLUMBER, ELECTRICIAN or BUILDER... but surely you will find DOCTORS, BUSINESSMEN, ENGINEERS etc... EDUCATION plays a role...

    BOTTOMLINE:

    WE WERE SLEEPING WHILE INDIA WAS PROGRESSING...

    I do know that a long rope is provided to you by the MODS... enjoy...
     
  14. Chakar The Great

    Chakar The Great SENIOR MEMBER

    Messages:
    3,728
    Joined:
    Apr 25, 2018
    Ratings:
    +0 / 1,168 / -0
    Country:
    United Kingdom
    Location:
    Ireland
    India is progressing??? In a parallel universe may be. The India we know is sick, poor, extremist , fascist, hungry and ugly. So dont mislead people here, we know the reality of India.
     
  15. Novice09

    Novice09 SENIOR MEMBER

    Messages:
    2,655
    Joined:
    Oct 20, 2009
    Ratings:
    +1 / 1,817 / -6
    You don't... and your thread proves it...

    https://www.washingtonpost.com/news...people-in-the-world-nigeria-is/?noredirect=on

    https://economictimes.indiatimes.co...mission-ceo/articleshow/66990372.cms?from=mdr


    https://en.wikipedia.org/wiki/Islam_by_country

    https://www.forbes.com/2007/08/05/india-jews-antisemitism-oped-cx_gw_0813jews.html#40434be83d45

    list is long but you need to come out of the PROPAGANDA MODE... We have a long journey to attain the levels of DEVELOPED NATIONS but yes we are moving fast...