The Indian economy is losing steam, says former finance minister P. Chidambaram. The former finance minister has recently expressed concern about India’s economy, stating that it is slowing down and losing its momentum due to various factors such as a decline in investment, a slump in consumption, and a decrease in export growth.
According to recent reports, India’s economic growth slowed down to a mere 4.5% in the July-September quarter, the slowest pace in six years, due to weak consumer demand and a decline in private investment. The Indian government has taken several measures to boost the economy, but these have not had the desired impact, and the situation remains grim.
One of the primary reasons for the decline in economic growth is the ongoing shadow banking crisis. Several non-banking financial companies (NBFCs) have defaulted on their repayments, causing a liquidity crunch in the market. This has led to a decrease in lending to small and medium-sized enterprises (SMEs), which, in turn, has impacted production and job creation.
The decline in the auto sector is also a significant contributor to the slowdown. The auto industry, which is a key driver of the Indian economy, has been feeling the pinch due to a slump in sales. The government has tried to boost the sector by reducing the Goods and Services Tax (GST) rate and introducing a scrappage policy, but these measures have not had the desired impact.
Another significant factor behind the slowdown is the decrease in consumption demand. The Indian economy is heavily dependent on domestic consumption, and a decline in demand has a severe impact on the economy. This is due to various reasons, including the liquidity crisis faced by NBFCs and the banking sector, the ongoing agrarian crisis, and rising unemployment levels.
The government’s attempts to revive the economy have been met with mixed results. The corporate tax rate was recently slashed to attract foreign investment, which was welcomed by the business community, but it may take some time for the effects to be felt on the ground. The government has also announced a merger of several state-run banks to improve their efficiency, but this may lead to job losses in the short term.
The former finance minister has also expressed concern over the rising inflation levels in the country. Inflation has been on an upward trend, primarily due to rising food prices. This has put the burden on the common man and has affected their purchasing power. This could further dent the already weak consumption demand and hamper the country’s economic growth.
The government’s measures to boost the economy have also been criticised for their lack of focus on job creation. The recent corporate tax cut may lead to an increase in profits for companies, but it does not necessarily translate into job creation. The government needs to create an environment conducive for investment and job creation, which will have a long-lasting impact on the economy.
The former finance minister has also criticised the government’s handling of the economy, stating that it has been reactive rather than proactive. He has advised the government to take the lead in reviving the economy and take bold decisions to tackle the crisis. The government needs to focus on structural reforms, such as land and labour reforms, to make India an attractive destination for foreign investment.
The Indian economy is at a critical juncture, and it needs immediate attention from the government. The government needs to take bold measures to revive the economy and create an environment conducive for growth. The economy is losing steam, and if the government does not take appropriate measures, it could lead to long-lasting damage to the economy.
In conclusion, the Indian economy is indeed losing its momentum, and there are multiple factors responsible for this. The government needs to take a holistic approach to revive the economy and avoid band-aid solutions. Effective measures need to be taken to tackle the ongoing shadow banking crisis, create job opportunities, increase consumption demand, and attract foreign investment. The government needs to take bold decisions and implement structural reforms to make India a better place for investment and business. It is imperative that the government takes immediate action to address the economic slowdown and prevent any long-lasting damage.