Now we find a knock in the economic growth of our country. On the economy front, the provisional estimates show that the rate of growth in India’s GDP fell steeply to 4.2 per cent in 2019-20 from 6.1 per cent in 2018-19. It is seen that India’s GDP has just become half in three years – from 8.3 percent reported in 2016-17, the year of demonetisation. India faced a great disaster regarding GDP. The decline of this took place before the start of pandemic itself. The 24% fall in the GDP growth rate is a result of the Narendra Modi government and its policy.
Gross domestic product (GDP) is the total monetary or market status of all the finalized goods and services produced within a country's limits in a specific duration. As a broad measure of overall domestic production, it performs as a comprehensive scorecard of a given country’s economic health.
The fall in the GDP growth rate is ‘phenomenal’ and ‘unprecedented’ said the CPI(M) Polit Bureau. The implementation of National lockdown, the medical effects of COVID-19, the great shut-down of demonetisation and also the GST implementation becomes the main reasons for the decay of the GDP. The main reason for the dip in the GDP is the massive fall in domestic demand which is due to the decline in the purchasing power.
Few of the streams were affected extremely like, manufacturing and construction. They found in a poor growth numbers this year of about 0.03 per cent and 1.3 per cent down from much higher numbers of 5.7 per cent and 6.1 per cent – in the past year.
Though the fall in growth is been found, some of the fields have increased its score compared to previous years. Agriculture growth in the country has been increased by 4 per cent which is double the rate in 2018-19, and public administration, defense and other services saw a great growth of 10 per cent, compared with 9.4 per cent in 2018-19.
The Left parties have been creating the issue of employment rates and are demanding in the increase of governmental expenditure. The Modi government is focusing on pursuing the neo-liberal trajectory of making more funds made available for investment by many private corporate s, giving them greater tax concessions and looting national assets. Public investments along with cash transfers and free food is the only way to carry out the meaningful recovery by providing people some sort of relaxation.
Compared to the last year, Gross fixed capital formation (GFCF) saw a contraction of 2.8 per cent, indicating the deeper problems. GFCF, which shows the level of investment activity in the economy has fallen by 30 per cent of real GDP. Even the private final consumption expenditure finds a lower rate of 5.3 per cent in 2019-20, against 7.3 per cent in the previous year.
The government estimated had suggested that India’s GDP would grow by 5 per cent in 2019-20. The first three quarters of last year had given a growth rate of only 4.6 per cent. Hence, the fourth quarter had to give a growth rate of 5.4 per cent to fulfil the required annual growth rate of 5 per cent.But, the fourth quarter saw only 3.1 per cent growth. On a quarterly basis, manufacturing and construction sectors showed contraction, pulling down the overall growth rate. The impact of Covid-19 in the month of March and the lockdown also took a heavy fall on growth in the fourth quarter. If growth with only one month of the fourth quarter experiencing the COVID shock could slip to 3.1 per cent, then one can easily say the kind of huge contraction the economy would suffer in the first quarter of 2020-21.