This is by far the worst economic slowdown that India is facing since 2013, there are a lot of reasons why this is happening. One significant incident in the eyes of the public is the demonetisation due to which people are stacking up cash instead of spending them on consumer goods and are meanwhile recovering from the demonetisation blow itself. Then followed by the GST ( Goods and service tax).
The combination of the two has definitely hit the MSMEs and big industries alike which seems like a dark tunnel. Next, the amount of debt we have put ourselves into as a country is way too high. The private sector banks are soaked in a series of controversial non-performing assets and finding a way out of it is more than complicated. To add to all this, it is not like the Global economy is doing very great either. The global slowdown of the economy has further effected the economy of India since the exports have taken a hit and there have been changes in the export-import tariffs. All these are in leading to a ripple effect in the economic slowdown in the world and in India particularly. It has led to the slowdown of 6.8 % in the GDP of India for the year 2018 -19.
But is India ready to deal with this kind of an economic slowdown after having two years of fruitful GDP growth. Well, the government sure is taking a lot of measures to help combat the economic slowdown but they may not all be bearing fruits.
The nation and the government have been banking on the Festive season since as per the usual trends sales pick up during the festive season which is ongoing and has more to come.
The government has been trying to combat the problem by trying to improve the supply end of the industries while the demand area has been completely forgotten while that should precisely be in focus. If the supply end is crafted to perfection but there is job sacking combined with the unemployment, there is not going to be any use to the measure.
Bank mergers have been taking place to be able to deal with the economic growth but with the load of having non-performing assents close to about 8 lakh crore it is not doing much help to put the economy back in place. The government has been pushing for back mergers but that move may not be very fruitful and will just yield to more complications according to a lot of economists.
Reducing tax burdens may help bring the economy in order and take some burden off the MSMEs that are not performing so well during the economic slowdown that has been taking a toll on them.
The private sector has been made to look at investments which is going to tip the balance in the favour of the economic growth. If the investments start to pick up then the liquidity comes back to normal and the cost of capital will begin to go down too. Thereby helping in trying to bring the economy back in order. Provided the policy changes and government norms are in favour.
While these are some things that the government should or can do to help combat the potential economic slowdown, there are some who believe that this, in fact, is not a recession at all, it is just that the economy is indeed growing but just at a much slower rate. The truth behind this can be found only after this financial year. And a clearer picture can be derived in the next 5 years.