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5 Trillion Dollar Indian Economy – Is It All Lost? The Answer Is ‘NO’

Modi 2.0 came with the promise of a much-estimated 5 trillion dollar blossom for the Indian economy, which has been on retreat instead. What to expect as the effects of slowdown turn into a deep recession?


Indian Economic slowdown - 5 Trillion Dollar Indian Economy - Is It All Lost? The Answer Is 'NO'

The latest GDP reports account for the most sluggish growth in a quarter in the past six years. Indians anticipated their pockets to deepen and their economy to bloom and not witness a slowdown when they seated Narendra Modi, for the second time, into the office of the Prime Minister.


Indian economy crises and the mistakes at a glance (Video)



Huge promises were made by the administration, biggest of them all, the exponential dream of a 5-trillion economy.

Is it all lost? The answer is No!!

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Indian Economy on retreat, what to behold? | Newsline | DKODING Studio

Everything is not lost for the Modi Government. They still have enough time to report a comeback. However, their workload has augmented several blocks.



Indian Economy’s slowdown – What is causing it?

While Mr. Modi’s responsible administration was busy playing the quarterback blame game, the nation’s economy stepped into a six-year low growth period. Riding on the aftereffects of Demonetisation, the country’s business sector never seemed to foresee the catastrophe that lied ahead of them.


Core-Sector-Growth-Recession-Newsline-DKODING
DKODING Studio | Eight Core sector growth came down while the cumulative growth of 2018-19 stood at 4.4%.

As a result of the effects of the slowdown, several companies had to shut down, many lost their livelihood along with their jobs.

Dependency on credit amplified and capacity to repay went down, thus triggering a downward spiral on the economic graph.

Banking Sector exemplifies the effects of the slowdown

The increased demand for credit lured banks to increase interest rates which in turn enlarged the number of bad loans. Due to this surge in defaulters of credit, banks were left with no choice but to tighten-up their line of credit, which is a prominent reason that credit isn’t available easily in the market today.


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Rising Gross NPAs in India | Newsline | DKODING STUDIO

Withdrawal of credit, de-infuses investment from the market, thus reducing job creation. Deduction of investment also affects the demand and supply curve directly.

India took time to admit the slowdown

While the effects of the slowdown were stagnating the Indian economy, our so-called representatives were busy debating whether it was really happening or not. Some even remarked the on-going crisis as Darkness just before the dawn. Some stated that India is onset to achieve newer heights under the leadership of Mr. Modi.


Video Credits: India Today

It wasn’t until late, when the downward spiral effectually took in, that our delegates were left with no choice but to accept the reality.  

Industries suffering the most

India’s automobile industry has witnessed the most impact of the latest economic crisis. Various leading manufacturers have already ordered a production-cut, meaning already 100,000 people have lost their jobs.

Car sales in India have dropped by 41% – the steepest fall over the last two decades.



Among the people who have already lost their jobs, most of them were contractual workers. With such a fall in demand, there is a growing fear in the market that if things aren’t aligned quickly many more will lose their jobs as well.



Auto Slowdown is dragging everything down

Small and medium businesses and thousands of ancillary units – that supply to the big manufacturers have been hit the hardest, making the daily wage laborers most vulnerable.

The fall [in production] is so large and so dramatic that it has affected every single product – two-wheelers, car, commercial vehicles,” says Sanjay Sabherwal, member of the Automotive Component Manufacturers Association of India, an industry body.


Automobile-Sector-Economic-Slowdown-Newsline-DKODING
DKODING Studio | India’s automobile industry segment is seeing the worst slowdown in decades.

Auto executives have been demanding tax cuts and easier access to financing for manufacturers, sellers, and consumers. The government recently announced a slew of measures – this includes a delay in increasing the registration fees for new vehicles and asking banks to lower interest rates on loans for cars and two-wheelers.

Will this be enough? It is still to be seen.

Poor Quality of Growth

The alarm over the economic condition is not merely a reflection of a slowdown in GDP growth but also the poor quality of growth.


The alarm over the economic condition is not merely a reflection of a slowdown in GDP growth but also the poor quality of growth. | Newsline | DKODING Studio

Latest News: India’s GDP Continues to Decline


Private sector investment, the mainstay of sustainable growth in every economy in a frenzy, with the reports suggesting already a 15-year low. If we put it in other words, there are no new investments in the market by the private sector.

But this economic slowdown hasn’t developed overnight.


India-Agriculture-Growth-Newsline-DKODING
DKODING Studio | Average annual agricultural GDP growth came down to 2.9% of the last five years compared to the preceding five years that was 4.3%.

Behind the fawning headlines in the press over the past five years about the robustness of Indian growth was a vulnerable economy, straddled in a slowdown with massive bad loans in the financial sector, disguised further by a macroeconomic bonanza from low global oil prices.

Supply Chains have found it tough to rebound

Additionally, demonetization destroyed supply chains and impacted agriculture, construction, and manufacturing that together account for three-quarters of all employment in the country.


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The unemployment rate in India, 2011-2018. | Image Credits: DKODING Studio

Before the economy could have properly recovered, the whole country was sent into another quandary, the dilemma of GST – a new indirect tax system for goods and services.

GST rollout wasn’t comfortable for many, some find it difficult to understand even today.

Indian economy’s obscure state of frenzy and slowdown has also thrown government finances in disarray causing the tax revenues well below the threshold expectations.



The path ahead

It’s true that tough times await the people of India. However, we all must maintain a degree of faith in our government and our leadership.

Prime Minister Modi has a unique advantage to himself, the benefit of a strong mandate to make the necessary changes which the leadership deems fit for to become a 5 trillion dollar Indian economy.


Video Credits: BBC News

The nation and the economy require a fool-proof plan to fly out of this economic crisis. Therefore, there’s a lot to do for the vision of a 5-trillion dollar Indian economy and to transform into a probable global superpower in the years to come.



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