×

UPSC Courses

DNA banner

DAILY NEWS ANALYSIS

  • 14 October, 2019

  • 3 Min Read

A lodestar to steer the economy.

GS-III: A lodestar to steer the economy.

News

There is a anxiety all over about the economic slowdown in the country. While the government is still in denial mode data flowing uninterrupted that sector is starting at a seriously challenging situation.

Data:

  • Private consumption has contracted and is at an 18-quarter low of 3.1%
  • Rural consumption is in a deep southward dive and is double the rate of the urban slowdown
  • Credit off-take by micro and small industries remains stagnant;
  • Net exports have shown little or no growth;
  • GDP growth is at a six-year low with the first quarter of FY20 registering just 5%;
  • Unemployment is at a 45-year-high.

Recession:

  • The technical term for the same is growth recession.
  • A recession is defined in economics as three consecutive quarters of contraction in GDP. But since India is a large developing economy, contraction is a rarity.
  • The last instance of negative growth for India was in 1979.

Consumption:

  • The growth of the Indian economy had been predominated by consumption inclusive of both Private Final Consumption Expenditure (PFCE) as well as the Government Final Consumption Expenditure (GFCE).
  • The recent sharp fall in PFCE in the June quarter to 3.1 per cent compared to 7.2 per cent in the March quarter has significantly contributed to the recent slowdown.

Measures taken and their impacts :

  • Recently announced Bank mergers further disturb a major chunk of the banking system in the coming year.
  • Recently announced package for the automobile sector or making banks pass on interest rate cuts to businesses have little impact
  • The announcement of a transfer of Rs 1.76 lakh crore from the RBI to the government will allow the government to maintain the fiscal deficit target at 3.3%. But, this will not provide the needed stimulus.( fiscal deficit today is 9%)
  • Government revised GST for the automobile sector, opened up FDI in contract manufacturing sector and even announced the recapitalization of the banking sector.

Way forward:

Focus on optimum utilization of funds granted by RBI and direct them to boost investment in the economy both infrastructural and research investment.

Structural shifts over the long run can be achieved through tapping into the health and education sectors that long for quality improvements.

Source: THE HINDU


Kirit Parikh Gas Pricing Panel

Kirit Parikh Gas Pricing Panel The government recently appointed a Kirit Parikh committee to review the gas pricing formula. The committee's major recommendations: Maximum cost: A fixed pricing band for gas from old fields, known as APM (Administrative Price Mechanism) gas, is required. These fields produce two-thirds of the co

G20 Presidency of India as a Watershed Moment

G20 Presidency of India as a Watershed Moment On December 1, 2022, India will formally assume the G-20 presidency. India will hold the presidency until November 30th, 2023. According to the Prime Minister, India's theme is "One Earth, One Family, One Future." More on the news: Agenda: The Prime Minister described

Women’s Representation in the Courts

Women’s Representation in the Courts It was only the third time in the Supreme Court's history that a bench comprised entirely of female justices heard cases. More on the news: Apex Court's all-woman bench: Chief Justice of India D Y Chandrachud has appointed Justices Hima Kohli and Bela M Trivedi to the bench. The Supre

Rare Earth Elements

Rare Earth Elements The Confederation of Indian Industry (CII) has urged the government to encourage private mining in the sector and diversify supply sources in light of India's reliance on China for rare earth minerals imports. Despite having 6% of the world's rare earth reserves, India produces only 1% of global output and import

Rooftop Solar Installations

Rooftop Solar Installations According to Mercom Research India, rooftop solar capacity installations in India fell 29% to 320 megawatts (MW) in July-September 2022. What are the Results? Cumulative Installations: As of the end of the third quarter of 2022, cumulative rooftop solar (RTS) installations stood at 8.3 GW. Gujarat overtook

Toppers

Search By Date

Newsletter Subscription
SMS Alerts