The economy of India is going through a hard blow of turbulence as it is shifting towards the low. One of the prime reason for such a downfall is the advent of the global Covid-19 pandemic. It has struck most economic sectors of the nation and its recovery seems unlikely.
The Indian economy at today’s age accommodates a lot of heinous issues. These issues range from rising inflation to growing unemployment. Adding salt over it is the global pandemic, which makes recovery seem impossible this year. This is perhaps why India’s GDP is likely to remain in the negative bar.
A major report by the SBI Ecowrap remarked that the national economy can contract up to 16.5%. Beyond that, India’s GDP is expected to sink by a 5.1% estimate. This will mark the lowest GDP fall in the history of four decades.
Here are five most common challenges that the Indian economy faces today:
1. Weak Demand
A stable and stagnated stock demand is the biggest challenge that the Indian economy faces today. A weak global demand in essential commodities like food, fuel, consumer goods, electricity and oil-seeds has decreased in rate over the last few months. This weak demand has closed the doors of various Indian providers to export the surplus for the global market.
This inability has led to lower foreign direct returns for the country on major sectors that usually contribute to the nation’s wealth. Tax redemption rates have also come down since their is minimal export returns coming.
2. An expanding rate of unemployment
One of the most grueling and expanding challenge of India’s economy is its unemployment ratio. A latest report released by the Center for Monitoring Indian Economy (CMIE) highlight the weakening economy. The report specifically point that nearly 5 million salaried jobs were lost in July. The total figure of such in the formal sector climbs up to 1.8 crore.
3. A lack of fiscal movement
Several proven and renowned economist have highlighted that India needs to settle another bunch of fiscal stimulus. They believe it will strengthen the growth of the economy. In the beginning of the pandemic, the government announced a fiscal capital package of a sum total of ₹21 lac crores. Most of the finance was meant to be focused on bank credit for in-numerous businesses.
However, reports tell that India’s fiscal stimulus runs in deficit. It is a common phenomenon of the emerging nations of the globe. Experts have often remarked that this is the reason behind the government’s inefficiency to provide direct movement. The figure of the deficit has already hit a high of $88.5 billion over April to June. It is a huge sum when compared to the corporate sector.
4. An emerging inflation
A high rate of inflation has led to a complicated network on the economic front of the nation. In the month of July, 2019, the value of retail inflation of 6.93%. It is way more than the RBI’s minimal target figure, which is 4%. This rise of inflation is an unusual one where any day the price of basic food items like pulses, vegetables, meat items and fish can rise sky rocket.
5. Rising Covid-19 cases
Many economic forums idealize the picture of India not meeting its financial crisis until they tackle the influx of Covid. Although the previous year saw an extreme high of cases, yet this year, we witnessed less case comparatively. However, despite the advent of corona vaccines, there has been a recent hike yet again in the number of cases. It has gone above the figure of almost 90,000 in the recent run.
This high in cases is yet again indicating towards a complete Lockdown. If happens so, instead of recovering, the economy will degrade further. Once if it’s starts to degrade again, it will be a back breaking task to recover it. This global pandemic, along with many nations, have been the biggest stone between the Indian economy and prosperity.