The past one and half year has brought down-slide in the Indian Economy, starting from the fallout of IL&FS scam till the strict nation-wide lockdown norms being imposed in view of COVID-19. In this report, we collate and review the facts and figures regarding the Indian Economy pertaining to the aforesaid period and suggest certain measures to revive the economic growth.
It is a well known fact that India is presently dealing with a health disaster of gargantuan magnitudes but going beyond that, there is also an economic recession which has been triggered by this disaster. This report is a brief explainer on the said economic recession, what has caused it. Further, it will delve into the details of each and every problem and will attempt to try and propose a viable solution to getting the Indian economy back on its feet.
SECTION 1: DECODING THE MAGNITUDE OF THIS CRISIS
This section briefly explains the scenario of the present times, starting when the first signs of a slowdown started emerging with the fall of IL&FS. It goes on to explain this in detail and then sheds some light on the cascading effects of the same, in terms of how several other sectors of the economy took a hit because of this and how things went from bad to worse. It ends with a set of diagrams and graphs so as to give the readers a nuanced representation about the present situation.
SECTION 2: ROOT CAUSES AND EARLY WARNINGS
This section delves into the depths of India’s flawed economic structure. Starting with Dr. Rathin Roy’s 2019 red flag about India falling into a middle income trap, it goes on to explain why he may be right about this. Forming this as a basis for proving existence of structural problems in India’s economy, it goes on to narrate the story of India’s economic growth since independence and how at several points in history, a wrong turn and lack of measures for course correction resulted in the rise of a structural flaw with long drawn effects. With a foundation in place for readers to understand the precarious state of India’s economy, it goes on to explain the flaws in India’s financial ecosystem. Coupling this with the hard truth about dipping household savings in India, it sheds some light on how this has rendered India’s economy a single engine one whose flaming out in recent years has caused the present economic crisis. Appropriate graphs and diagrams are provided at the appropriate places for a better understanding.
SECTION 3: THE CHALLENGE AHEAD: GETTING THE ELEPHANT BACK ON ITS FEET
This section provides the readers with some essential steps which are required to be taken for the long term growth of the Indian economy. It includes reforms in the financial system, reviving DFIs, reviving domestic demand and savings, proper channelization of incoming future investments and divestment of PSUs. It also makes a detailed case for why the government needs to opt for large scale deficit financing and why we need to take urgent steps to capitalize on our highly favorable demographic dividend.
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