- At 5%, India’s economy registered its slowest gross domestic product (GDP) growth rate since 2014.
- However, the current GDP figures are no indication of any impending recession.
- In India, the economy is growing.
- However, the rate of growth has slowed down, which is a setback for the country as it requires an accelerated growth to provide employment to millions entering the job market every year.
- A slowdown in growth rate would turn the population dividend into an unmanageable burden.
DIFFERENCE B/W 2012 & 2O19
- Before 2012-13, the last time the GDP growth rate had slipped below the 5% mark was in 1984-85 and continued till 1987-88.
- Since June 2012, the earliest period for which we have quarterly GDP statistics for the current series, GDP growth has only been slower than 5% twice.
- It was 4.3% in March 2013 and 4.9% in June 2012.
- In the current slowdown the GDP has not yet slipped below 5%.
- But there is a high probability that for the next 2 quarters it may go even below 5% before it again rebound.
- Inflation in 2012-13 was very high compared to what it is now.
- In earlier slowdown the inflation even touched the double digit.
- However it has remained around 4% in the current slowdown.
REASON FOR SLOWDOWN
- During 2012-14, the GDP growth slipped below 5% mark on the account of what is now known as policy paralysis.
- Policy paralysis is an inability to move or do something.
- When policies are in place but the person who has to move them does not perform the relevant changes due to many reasons.
- Like- Corruption, Environment clearances etc.
- However the current slowdown is interspersed with a series of policy decisions.
- Two mega policy decisions — Demonetisation in 2016 and the rollout of GST in 2017.
- The policies were aimed at greater formalisation of the Indian economy.
- But the twin disruptions struck a big blow to the informal sectors that employ the maximum number of the workforce