{"id":53384,"date":"2019-10-23T18:08:24","date_gmt":"2019-10-23T12:38:24","guid":{"rendered":"https:\/\/blogadmin.forumias.com\/?page_id=53384"},"modified":"2019-10-23T18:08:32","modified_gmt":"2019-10-23T12:38:32","slug":"answered-what-are-the-various-reasons-for-slower-economic-growth-do-you-think-recent-tax-sops-announced-by-government-are-sufficient-to-arrest-the-slowdown","status":"publish","type":"page","link":"https:\/\/forumias.com\/blog\/answered-what-are-the-various-reasons-for-slower-economic-growth-do-you-think-recent-tax-sops-announced-by-government-are-sufficient-to-arrest-the-slowdown\/","title":{"rendered":"[Answered] What are the various reasons for slower economic growth? Do you think recent tax sops announced by government are sufficient to arrest the slowdown?"},"content":{"rendered":"\n
Demand of the question<\/strong>
Introduction. <\/strong>Contextual Introduction.
Body. <\/strong>Reason for economic slowdown. Are tax sops enough to accelerate the economy?
Conclusion. <\/strong>Way forward. <\/td><\/tr><\/tbody><\/table>\n\n\n\n

Indian economy is facing slowdown in recent times. This has created a panic environment in the environment and the government officials. There are structural issues in land, labour, agricultural marketing which need to be addressed and is being ignored that need urgent attention. Various steps like tax concessions being taken in hope to boost economic growth that may not help in long turn.<\/p>\n\n\n\n

Reasons for\nslowdown of economy:<\/strong><\/p>\n\n\n\n

  1. Crisis in agriculture: <\/strong>There is a crisis\nin agriculture that runs deep. GDP per capita in the agricultural sector has\nbeen less than one-tenth GDP per capita in the non-agricultural sector for 25\nyears. Growth in output is monsoon-dependent. Employment creation is\nnegligible. The outcome is rural distress.<\/li>
  2. De-Industrialisation:<\/strong> The share of\nmanufacturing in GDP and employment is lower than it was 25 years ago. India\u2019s\nshare in industrial production and manufactured exports in the world economy\nhas declined steadily. The beginnings of de-industrialisation are discernible.<\/li>
  3. Exports: <\/strong>The exports have reduced in\nrecent times. The US dollar value of merchandise exports stagnated during the\nlast three years.<\/li>
  4. Consumption:<\/strong> Private consumption\ncontributes nearly 55-60%, to India\u2019s GDP has been slowing down. While the\nreduced income growth of households has reduced urban consumption,\ndrought\/near-drought conditions in three of the past five years coupled with\ncollapse of food prices has taken a heavy toll on rural consumption.<\/li>
  5. Investment:<\/strong> Gross Fixed Capital Formation\n(GFCF), a tool to measure investment in the economy has declined from 34.3% in\n2011 to 28.8% in 2018. Similarly, in the private sector, it has declined from\n26.9 per cent in 2011 to 21.4 per cent in 2018. The household sector, which is\nthe biggest contributor to the total capex in the economy, has lost steam since\ndemonetisation.<\/li>
  6. Failure of the Insolvency and Bankruptcy Code\n(IBC):<\/strong> IBC has met limited success. It has been unable to resolve\ninsolvency Cases in a time-bound manner. Therefore it has led to limited\nresolution of Non-performing assets and cases.<\/li>
  7. Rising global trade tension:<\/strong> Recent trade\nwar between USA and China and other global trade wars has impacted growth all\nover the world. It has impacted manufacturing and exports in different parts of\nthe world, impacting Indian economy too.<\/li>
  8. Unemployment:<\/strong> Unemployment is all time\nhigh and has impacted the buying ability of individuals. Usher of new\ntechnologies, bad policies and inability of manufacturing sector to boost up\nthe growth has impacted the overall growth of the country.<\/li><\/ol>\n\n\n\n

    Are tax sops\nenough to accelerate the economy?<\/strong><\/p>\n\n\n\n

    1. The recent announcement of tax sops for big\ncorporates are not enough as it is only a short term measure.<\/li>
    2. A credible export agenda requires policy\ninterventions that lie outside the domain of the commerce ministry. These\ninclude improvements in infrastructure and logistics, building coastal\nemployment zones, better bank finance for exporters, and most important, labour\nlaw reform.<\/li>
    3. Slowdown is mainly due to fundamental\ndeficiencies and thus need grass root actions. Issues such as labour reform with\na strong political effort is necessary.<\/li>
    4. If there is a slowdown or downturn in an\neconomy, governments should use counter-cyclical, expansionary, macroeconomic\npolicies to revive growth.<\/li>
    5. Fiscal policy should provide a stimulus,\npreferably by stepping up public investment. Monetary policy should provide a\nstimulus to private investment by lowering interest rates.<\/li>
    6. Under the current macro environment, monetary\npolicy seems to be less effective than fiscal policy as \u2018improper transmission\nmechanism\u2019 fails to pass on benefits to the real economy.<\/li><\/ol>\n\n\n\n

      The global economy is undergoing a crisis and has weakened significantly. It is extremely volatile at this stage, investor’s confidence across the globe has fallen sharply and downside risks are emerging each day. So the government should take appropriate measures to improve the credit cycle through investment and savings and promotion of foreign investment will bring the economy from slowdown in future.<\/p>\n","protected":false},"excerpt":{"rendered":"

      Demand of the question Introduction. Contextual Introduction. Body. Reason for economic slowdown. Are tax sops enough to accelerate the economy? Conclusion. Way forward. Indian economy is facing slowdown in recent times. This has created a panic environment in the environment and the government officials. There are structural issues in land, labour, agricultural marketing which need… Continue reading [Answered] What are the various reasons for slower economic growth? Do you think recent tax sops announced by government are sufficient to arrest the slowdown?<\/span><\/a><\/p>\n","protected":false},"author":61,"featured_media":49132,"parent":0,"menu_order":0,"comment_status":"open","ping_status":"closed","template":"","meta":{"jetpack_post_was_ever_published":false,"footnotes":""},"class_list":["post-53384","page","type-page","status-publish","has-post-thumbnail","hentry","entry"],"jetpack_sharing_enabled":true,"_links":{"self":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/pages\/53384","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/pages"}],"about":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/types\/page"}],"author":[{"embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/users\/61"}],"replies":[{"embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/comments?post=53384"}],"version-history":[{"count":0,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/pages\/53384\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/media\/49132"}],"wp:attachment":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/media?parent=53384"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}