The GDP (Gross Domestic Product) growth rate of India declined to a three-year low of 5.7 % in the March-June 2017 quarter. It was 6.1 % in the last quarter. This is the slowest growth rate recorded in two years and has led India to lose its status as the world’s fastest-growing major economy to China. No one can stay away from this truth what Shri Sinha and Shri Shouri stated. There is one very beautiful book “Future Shock” by Alvin Toffler. It is a very older book but holds relevance for today also.
The central idea of his book is those who failed in anticipating the future have faced future shock. Same thing happens with this newly formed government. Everything can’t be handled with sweet sound and rhetoric speeches. They underestimated the reality and failed in anticipating. Just after coming to power immediately Make in India program was launched. If we see just from outside, it will make us to feel like empowering or shining India. But on the real ground scenario is different.
Without preparing ground, launching name and allocating funds is not enough to make dream true. We have historically river war in between states and union, don’t have electricity to glow remote areas, weakening of Indian Railway adversely effects freight leads to transport issues are the three major factors of Industrial growth. We have no plan for strengthening these three pillars. Whatever we did on the name of above four has been matter of comedy and formality. Something is being trying to do but does not hold much worth of it.
After that additionally and unnecessarily Demonetisation was done to create political stunt whose aim is still myth. Each & every time our honorable F.M. changed its goal post over it. Sometimes it was told that it was to stop terror funding, sometimes it was to regulate banking and sometimes it was told for creating digital India.
Informal sector accounts for 90% employment in the country. This is the area, where November 8 decision hitted most. Demonetisation was a negative shock to the economy and wiped out 84 % of the cash in circulation overnight. Investors were in state of confusion due to high rates of GST was being slapped in the commodities. No doubt GST could be one of the unprecedented reform in economy since independence. But illogical tax slabs and shortlisting commodities into three slabs was like do anything as per wishes.
They paused production for the time being. The uncertainty caused due to GST led to the de-stocking of goods ahead of its implementation on 1st July 2017. Manufacturers and traders were unsure as to the tax impact of GST on the goods that were manufactured or bought prior to the GST regime but remained unsold. They started destocking or reducing the amount of stock. Hence, the manufacturing slowed down.
There are also other causes that could be related to the other dimensions. One of them are high growth rate of the population. Rate of growth of population being an important determinant of economic growth, is also responsible for slow growth of national income in India. Whatever increase in national income has been taking place, all these are eaten away by the growing population. Thus, high rate of growth of population in India is retarding the growth process and is responsible for this slow growth of national income in India.
Another cause of economic slowdown is low level of technology and its poor adaptation. In India low level of technology is also mostly responsible for its slow growth of national income. Moreover, whatever technology that has been developed in the country, is not properly utilized in its production processes leading to slow growth of national income in the country.
Apart from that it has frequently been talked by experts that excessive dependence on agriculture is also one of the main cause of economic slowdown. Agriculture shares very less percentage to the GDP where service sector contributes most to the GDP. In spite of it majority of people have been engaged in primary sector than secondary and tertiary services. This is the basic reason why disguised unemployment found much in agriculture sector. So, people should be shifted from primary sector to secondary and tertiary sector to boost our Economy.
The major share of national income is usually coming from agriculture which is contributing nearly 34 per cent of the total national income and engages about 66 percent of the total working population of the country. Such excessive dependence on agriculture prevents a quick rise in the level of national income as well as per capita income as agriculture is not organized on a commercial basis rather it is accepted as a way of life.
Another important reason behind the slow growth of our economy in India is the poor rate of development of its industrial sector. The industrial sector in India has failed to maintain a consistent and sustainable growth rate during the planned development period and more particularly in recent years. It is because of lack of adamant policies and due to political interests in our political society. Moreover, the development of basic industry is also lacking in the country. All these have resulted a poor growth in the national income of the country.
In India, the infrastructural facilities, transport, communication, power, irrigation etc. have not yet been developed satisfactory as per its requirement throughout the country. This has been resulting major hurdles in the path of development of agriculture and industrial sector of the country leading to poor growth of national income.
Another important cause of economic slowdown in poor saving of people. Our banking systems failed in attracting people toward banking. Complex policies and too much obstacle of withdrawing money push off the people. Consequently, the rate of savings and investment in India is also quite poor as compared to that of developed countries of the world. If less saving is there then there will be less investment because saving would not turn into investments. Socio-political conditions prevailing in the country are also not very much conducive towards rapid development. Peculiar social institutions like caste system, joint family system, fatalism, illiteracy, unstable political scenario etc. are all responsible for slow growth of economy in the country.
In the meantime, the Government has taken various steps to attain a higher rate of growth in its economy by introducing various measures of economic reforms and structural measures. All these measures have started to create some impact on raising growth of economy of the country. Demonetization disrupted India’s largely cash-based economy with little good to show for it. People with black money found ingenious ways of converting their cash by illegally opening multiple accounts in multiple banks under different names.
This defeated the stated objective of the scheme. The GST, meanwhile, was a well-intended scheme to eliminate multiple tax structures by introducing a single tax. It was felt that the GST would simplify the tax structure and encourage foreign direct investment into India. Unfortunately, the design and execution of the scheme were so complicated that it disrupted business, especially for small traders.
Even when GDP growth touched 9.2 percent in 2016, economic growth failed to create new jobs for the youth. According to estimates, against the 10 million jobs needed every year, the government managed to create only 230,000 jobs in the last fiscal year. So substantial economic development is needed which takes cares of all society and providing jobs with the upliftment of economy. Whatever we have lost due to policy weakness needs to be recovered as soon as possible.