India’s GDP is rolling down the slope and showing an alarming figure of 5 percent. It is the lowest in 25 quarters or six years. The country is seeing its worst economic crisis as the slowdown is arresting India’s financial growth rate and causing an adverse impact on the industries and other businesses in the nation. The NDA government promised of a 5 trillion dollar economy within the next five years while presenting the first budget of its second term government after polls. But the current decline is shaking the very foundation of this ambitious dream and has made the government jump to action to prevent further losses.
All the sectors of industries and businesses of India are facing awful fiscal losses and a decline in their business. Since 2016, the economic barometer was not showing enthusiastic signs to anyone, and by FY18, the economic slump sent shockers everywhere. This is a serious blow to the economic planning of the current NDA government and also exposes the big loopholes and flaws in it. So where did the government went wrong in understanding the economic scenario of the country and what were the decisions that made it even worse?
To start with, many economic critics say that the story of economic slump began right from the time of demonetization. Some state it the biggest blunder made by any government in the economic history of India. It came so sudden that both industries and common people were shocked by the decision and the reserve liquid money that they had become useless overnight. It created a crisis among all to manage their day to day expenditures and manage the show. Wages and payments of business transactions came to a grinding halt, stopping the means of production as well. Though the large corporate houses did not suffer much or nothing due to demonization, the mid-level business houses and small trades suffered the most due to incapability of cash transaction.
Another factor that is making the economic to crumble is the overzealous approach of the government to make reforms to economic structure. In simple terms, the government is trying to make multiple changes in one go rather than going step by step. The taxation implementation and application of GST left the traders and business houses in an array of confusion. There was a lack of clarity on the implantation of GST, which is supposed to be a uniform tax code which levied on all types of business transactions. But still, there are other types present like the cess, surcharge, and excise duty, which is making the tax structure a burden for everyone. In a sense, the very idea of implementing GST becomes baseless with the additional tax brackets in the line.
The hastiness of the government of changing several things in economic structure in too little time left the industries delusional and flabbergasted. As a result, when the losses started mounting, the industries had to resort to cutting down its workforce or make the things they manufactured pricey in order to recover their loss.
The ignorance of PSU sectors and focusing on a few handpicked private players of the market made the money-minting government organization to bear losses as well. Instead of reforming and strengthening the government-run companies, the private players were given more enthusiasm, which sent a negative vibe in the market. Stock markets and value of rupee both came crashing down as a result of the incoherent economic decisions of the India’s government. The government had to lastly dig into its reserve fund of 1, 76000 crores to put brakes on the economic slump. But many consider that the government is still not focusing on core issues and still trying to make some cosmetic repairs to the damaged economy of the country.