Indian economy is always, the best economy, always our economy

What Happen to Indian Economy? How to build it back? Please read patiently to understand the Indian Economics.

How to find the Economic growth of a Country?
Economy of the Country can be understood by certain Pointers like GDP(the total income of a country). This is calculated as the % of growth of a country's economy than the previous year.

When Production in all departments of the country ( like agriculture, automobile, mobile phone, Clothes) increase, this GDP% increases, this will directly lead to increase of Employment in the country, so salary of citizens increases, so consumption of products increases because of increase buying capacity, so demand for production increases, this again stimulates the production in the first place. This is a complete cycle which is based on production of goods through investments in the country in various field.

When GDP increase all the other metrics given above(like salary of citizens, consumer capacity) increases or viceversa.

Important point is we should compare the GDP only with our Country's last year GDP and not with other country's current GDP for the true picture.

History of Indian Economy:
Before 90's Indian economy was called as Hindu Economy which stood between 1%-3%. Because no development measures and production or investments India suffered the economic crisis for many decades. So, after 90's the new economic policy made our competency more among the economic giants of the world and we started rising to a maximum of 8%-9% till 2012-13.

And due to world economic crisis the % started declining in the last quarters of 2013-14.

BJP's Strategies in Indian Economy:
So BJP government told to increase this % and won the election based on the "Development manthra."

Immediately after BJP government took charge they made a correction in how the GDP is calculated twice. And which in turn always showed an Increase in the GDP growth but there was  no reflection in other matrices like production rate, consumption rate or demand rate as pointed above. This for many reasons not noticed by economic giants in the beginning of the first term of BJP government.

Before taking rebuilding mechanism in the economic way, BJP government instead of reversing the decrease of GDP growth they pushed even further down the rate because two consecutive measures namely Demonetisation and Followed by another hammer hit GST, which range til 28%.

Main Reasons for poor Investments after 2019 Budget:
Tax for Super Rich Foreign Investments and
CSR made as compulsory and it is made as criminal case if not done.

These are affected the investors' sentiments. It Made the production rate decrease, Which impacted the income of common man, through low wage or layoff, Which inturn impacted demand of products in the market.

All these reflected slowly and steadily and shown its teeth in the national Sensex. Consistent Sensex decline and decline of the value of indian rupee and it is then Indian government accepted this economic crisis openly and started accepting it and started working on it(as if it doesn't know what was coming)

What were the measures taken now?:
Registration charge, Super rich tax, CSR compulsion, were withdrawn  frkm the 2019 budget later after a month.

Though it is not a corrective measure it the duty of government but government has said, GST benefits will be given as per  the promise,

70,000 crores is given to national banks for stabilizing the banks with unpaid loans (it is very less compared to what it struggles with, it struggles with 9lakh crores)

But are these measures enough?
Unorganized sectors, Farmers and employees of automobile sectors are suffering a lot with layoffs today.

Consumption reduces, Excess capacity of production in line, Demand reduced, low rural wages, makes a chain of problems.
Village consumption which is the largest consumption portion in India getting reduced because of low wage. So certain structural changes should be done immediately.

Monterey Policy managed by RBI vs Fund Policy managed by Finance Ministry should be concentrated and reforms should be done.

To supply money to consumers and investors, decreasing  the interest rate, so that consumers will use it for consumption and investors use it to use it for investments and production is a good step.
But after reducing it for 4times already nothing changed in the economic reality.
Banks are out of money because of the 9 lakh crore unpaid loans so this doesn't work.

This show that Monetary policy didn't work at all.

Coming to fiscal policy, government is having loans and interest for loans to be paid. Government investment is reducing(now it is only 3.5lakh crores) and it is not increasing asper the promise in Independence day speech by PM(it is 20 lakh crores per year)

What can be done?
Stimulus should be given to both people, the consumers and corporates. Like reducing the petrol prices, reducing the 28% GST Would largely impact the consumer consumption positively and would reflect in the rural buying capacity, which reflects in increase of demand, in turn it will reflect in increase of production and more investments.

It is an English translation of the Interview given by Professor Jothi Sivanganam, Professor of Economic department, Madras University

Thank you Behindwoods.