Declining GDP Growth in India: Government Mistakes and Economic Challenges

India's GDP growth rate has been in a downward trend recently. This reduction in growth is not unprecedented, as economic growth is subject to natural variations due to seasonal, cyclical, and random factors. However, the government's economic strategies and decisions have significantly contributed to this decrease, highlighting the importance of coherent and well-thought-out policies.

Context and Economic Context

Several economic events have impacted India's GDP growth rate. Notably, the demonetisation and the poorly designed and quickly implemented Goods and Services Tax (GST) have had a substantial impact on the economy. Demonetisation in November 2016 led to a shortage of cash, impacting cash-dependent businesses and the informal sector. The Goods and Services Tax (GST) roll-out, although intended to streamline the tax system, created confusion and challenges for businesses, further exacerbating economic instability.

Compounded by these issues, the Indian economy was already struggling with massive bad loans in the banking system. This financial crisis had a ripple effect on economic growth, pushing the GDP growth rate from over 8% in Financial Year (FY) 2016-2017 to about 4% in FY 2019-2020.

Economic Challenges and Government Focus

The decline in GDP growth isn't just a result of these external and internal factors but also of the government's focus on non-core issues. The government has been criticized for prioritizing less impactful issues and failing to adequately address key economic challenges such as:

Agriculture and farmers' welfare Manufacturing sector growth Export competitiveness Education and skill development Job creation Banking and financial stability Infrastructure development Taxation reforms

A focused and well-coordinated approach to these areas is essential for long-term economic growth. Unfortunately, the government has been criticized for insufficient attention to these critical sectors, leading to a decline in economic performance over the past few years.

Critical Perspectives and Insufficient Government Measures

Despite these challenges, the government has taken some steps. For instance, Nirmala Sitaraman, the then Finance Minister, did revoke some specific measures, but these were exceptions rather than indicative of a broader strategy. The lack of a comprehensive and effective strategy is evident in the economy's continued struggle.

While the government cannot address all economic issues alone, they must take proactive measures to overcome these challenges. As the saying goes, "It's not just the government's job; it's everyone's job." Encouraging people to spend and companies to change their strategies can significantly boost economic growth. People need to increase consumption, and businesses must adapt to market conditions.

The Role of Manufacturing Sector

The decline in India's GDP growth rate is also attributed to the slowdown in the manufacturing sector. This sector, which traditionally contributes significantly to the economy, has shown less growth in recent years. A combination of factors, including policy challenges, trade wars, and global economic downturns, has hit the manufacturing sector hard. While some experts believe that government mistakes are behind this slowdown, others argue that it is a natural, cyclic phenomenon that can be corrected with counter-cyclical fiscal measures.

Conclusion

The current state of India's economy is a result of a complex interplay of various factors, both internal and external. While the government can take steps to improve the situation, the economic landscape requires a collective effort from all stakeholders. Addressing the shortcomings in government policies and focusing on core economic issues will be crucial in reversing the decline in GDP growth and fostering a more stable and robust economic environment.