{"id":35127,"date":"2018-10-31T15:22:46","date_gmt":"2018-10-31T09:52:46","guid":{"rendered":"https:\/\/blog.forumias.com\/?p=35127"},"modified":"2018-10-31T15:22:46","modified_gmt":"2018-10-31T09:52:46","slug":"understanding-the-slowdown","status":"publish","type":"post","link":"https:\/\/forumias.com\/blog\/understanding-the-slowdown\/","title":{"rendered":"Understanding the slowdown:\u00a0"},"content":{"rendered":"<p><a href=\"http:\/\/www.thehindu.com\/opinion\/op-ed\/understanding-the-slowdown\/article19694073.ece\"><span style=\"font-weight: 400;\">Understanding the slowdown<\/span><\/a><span style=\"font-weight: 400;\">:\u00a0<\/span><\/p>\n<p><b>Context:<\/b><\/p>\n<ul>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">Causes responsible for the slowdown of Indian economy<\/span><\/li>\n<\/ul>\n<p><b>What are the issues?<\/b><\/p>\n<ul>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">There is a slowdown in Indian economy<\/span><\/li>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">The GDP has lost momentum<\/span><\/li>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">The reasons of slowdown are being explained as beyond the government\u2019s control; that are deficient rains, the sluggish world economy, recent demonetization in the economy and Goods and Services Tax (GST)<\/span><\/li>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">Both the GST and the demonetization failed to bring change in the numbers<\/span><\/li>\n<\/ul>\n<p><b>What are the four engines of the economy?<\/b><\/p>\n<ul>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">Exports, government investments, private consumption, and private investments<\/span><\/li>\n<\/ul>\n<p><b>What has happened to the four engines?<\/b><\/p>\n<ul>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">During the United Progressive Alliance\u2019s (UPA) tenure &#8211; the four engines powered the economy<\/span><\/li>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">Growth in government investments and private consumption remained on the track until it has started slowing down in the quarter ending June 2017<\/span><\/li>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">Exports and private investments have lost momentum<\/span><\/li>\n<\/ul>\n<p><b>What is the background?<\/b><\/p>\n<ul>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">Government investments and private consumption depend on how well the economy is doing<\/span><\/li>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">As incomes improve, private spending and tax collections pick up. <\/span><\/li>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">The 2008 financial crisis was a big blow to the export business including India<\/span><\/li>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">Recovery in the global economy has lifted exports of most Asian countries<\/span><\/li>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">Indian export remained stagnated after the crisis<\/span><\/li>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">The overvalued rupee eroded the competitiveness of Indian export<\/span><\/li>\n<\/ul>\n<p><b>What are the challenges? <\/b><\/p>\n<ul>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">The steps taken for improving the ease of doing business and the foreign investments regime have proved insufficient in restarting the private investments cycle<\/span><\/li>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">The share of investments in GDP GDP has declined steadily for the past five years.<\/span><\/li>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">New jobs are not created<\/span><\/li>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">Without new jobs, consumption will only grow up to a point<\/span><\/li>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">India\u2019s economic future can improve significantly with investments-led growth<\/span><\/li>\n<\/ul>\n<p><b>Why are investments on hold? <\/b><\/p>\n<ul>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">The returns-risk projections of projects are not favourable<\/span><\/li>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">Companies are not convinced that new factories will be sufficiently profitable<\/span><\/li>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">The government is politically sensitive<\/span><\/li>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">The government has set a low target for consumer price inflation<\/span><\/li>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">The government is unable to progress on land and labour reforms<\/span><\/li>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">Government&#8217;s policy on the bad bank has impacted small companies in raising finance<\/span><\/li>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">The environment of constant shocks and unanticipated policy changes is hurting investment sentiment in the economy<\/span><\/li>\n<\/ul>\n<p><b>Whom to be made responsible?<\/b><\/p>\n<ul>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">There is no policy paralysis<\/span><\/li>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">Decision-making is speedy which demonstrates the growing disconnect between policy tools and objectives<\/span><\/li>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">The demonetization has dragged the slowing down economy<\/span><\/li>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">The complicated design of the GST may have added to the vulnerabilities of the informal sector<\/span><\/li>\n<\/ul>\n","protected":false},"excerpt":{"rendered":"<p>Understanding the slowdown:\u00a0 Context: Causes responsible for the slowdown of Indian economy What are the issues? There is a slowdown in Indian economy The GDP has lost momentum The reasons of slowdown are being explained as beyond the government\u2019s control; that are deficient rains, the sluggish world economy, recent demonetization in the economy and Goods&hellip; <a class=\"more-link\" href=\"https:\/\/forumias.com\/blog\/understanding-the-slowdown\/\">Continue reading <span class=\"screen-reader-text\">Understanding the slowdown:\u00a0<\/span><\/a><\/p>\n","protected":false},"author":61,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"jetpack_post_was_ever_published":false,"footnotes":""},"categories":[555],"tags":[],"class_list":["post-35127","post","type-post","status-publish","format-standard","hentry","category-test-1","entry"],"jetpack_featured_media_url":"","views":{"total":0,"cached_at":"","cached_date":1704752042},"jetpack_sharing_enabled":true,"_links":{"self":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/posts\/35127","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"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=35127"}],"version-history":[{"count":0,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/posts\/35127\/revisions"}],"wp:attachment":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/media?parent=35127"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/categories?post=35127"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/tags?post=35127"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}