INDIAN ECONOMY OVERLOOK

To achieve the target of a $5 trillion economy, many initiates were taken by the Government to name a few: Atmanirbhar Bharat, Make in India, Doubling the farmer's income by 2022, Jan-Dhan Yojana, and an investor-friendly ecosystem

Many people have doubts about the present situation of the target announced grandly on August 15, 2019, from the red fort by Prime Minister Narendra Modi. The Independence day on which the Indian Prime minister set a target of turning India into a $5 trillion economy by FY25 was a memorable one.

India had a GDP of $2.83 trillion in the Financial Year 2020, so the country needed to grow by nearly 100% in dollar terms in the next five years. Doubling the size of the Indian economy happened earlier also, between the Financial year 2004 and Financial Year 2008– when India emerged as a $1-trillion economy for the first time. This precedent made it realise that doubling the Indian economy one more time is possible.

Through this platform, I am trying to help all those queries and for that, it is important to have a wholesome knowledge of the economy. To provide you with the big picture I am writing down this matter in 2 parts. This is the first part in which readers will get base.

To achieve the target of a $5 trillion economy, many initiates were taken by the Government to name a few 

• Atmanirbhar Bharat

• Make in India

• Doubling the farmer's income by 2022

• Jan-Dhan Yojana

• Creation of an investor-friendly ecosystem

The year 2020

But as happens usually a target has to meet hindrances. Here Government of India has to face covid outbreak in early 2020 just like the rest of the world. Covid changed everything. The government was forced to impose strict regulations which hampered economic activity and growth. 

Measure taken was a pan-India lockdown; so that the Covid spread could be contained. Many measures were announced by the government to soften the blow to individuals as well as businesses.

The year 2021

Just when things started looking up again and economic activities gained some traction backed by government support like guaranteed loans under the Emergency Credit Line Guarantee Scheme (ECLGS), hit the second Covid wave. Several localized lockdowns hit factory output again, while growth in the private sector remained below par, and challenges were faced again by both the supply and demand sides.

The year 2022

Cut to 2022, the Russia-Ukraine conflict flared up in late February and Global supply chains witnessed massive disruptions. Commodity prices, especially energy spiked. Internationally, Inflationary pressure was experienced.   

This led key central banks, to raise interest rates substantially to break the back of inflation. Consequently, key economies like the US and those in Europe are now staring at recession. 

Outcomes

Thanks to the integration in a globalized world, any economic policy or activity of any nation hurt the prospects of the Indian economy as well. 

Independent agencies have revised the growth projections for several key countries, including India which had dreamt of being a $5 trillion economy. witnessing all situations domestic policy-makers have, shifted the goal post by two years to 2027.

The hike in the interest rate by the US Federal Reserve led to a capital flight from developing economies, including India, that resulted in a fall of the rupee against the greenback. While a weak rupee should help exports, it does make purchases from overseas more expensive and didn’t prophet well for a net importer like India.

 

In the next part, we will look at the ways by which India can attain the target of a 5 trillion dollar economy.

-BHAVNA GEED.