The Indian economy has been witnessing a drop in several key indicators and thus, experts have warned that India may soon be moving towards a serious economic slowdown.
According to an IANS report, a number of economic indicators have performed alarmingly:
- A Shortfall in Collection of Direct Taxes: The collections on direct tax front have reportedly not been upto the planned target. Direct tax collections, reported on April 1, fell short by Rs 50,000 crore on account of poor personal income tax collections, thereby, reportedly failing to meet the revised target of Rs 12 lakh crore for fiscal year 2018-19. IANS sources are quoted as saying that the target of personal income tax of Rs 5.29 lakh crore was not met, severely affecting the direct tax collections.
- Decline in Household Savings: Per the report, household savings in 2017-18 dropped to the lowest since 1997-98, hit by the Modi led-BJP government’s demonetisation policy. In proportion to the gross domestic product (GDP), household savings declined to 17.2 per cent. According to the Reserve Bank of India’s data as cited, the decline in household savings— that are not corporate demand— have pulled down investments by 10 basis points during 2012 to 2018.
- Drop in Auto sales: Reportedly, the sale of passenger vehicles came down by 2.96 percent on a year-on-year basis in March to 291,806 units. This is reportedly based on the data released by the Society of Indian Automobile Manufacturers (SIAM). Citing the data, the report states that domestic sales of passenger vehicles in 2018 stood at 300,722 units. However, during the financial year 2018-19, passenger vehicles sale grew by 2.7 per cent.
- Foreign Direct Investment Declines: In another major embarrassment for the NDA government touting success of ‘Make in India,’ the inflow of FDI into India, which had increased over the past few years, contracted by as high an amount as 7 per cent, i.e, $33.49 billion during April-December in the current fiscal, according to Commerce and Industry Ministry data. Reportedly, foreign fund inflows during April-December 2017-18 stood at $35.94 billion.
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Given the major economic slowdown in key areas, economists and analysts have said that the economy, as a whole, “is not in a very good shape.” Elaborating on the crisis, former Chief Statistician Pronob Sen in his conversation with IANS suggested that demonetisation and GST are to be blamed for the slowdown. “What has basically happened post demonetisation and the GST roll-out, the non-corporate sector has been hit and that is what is showing.”
Reportedly, he is of the opinion that there might be a further decline in these economic indicators, as the non-corporate sector, that creates the most jobs in India “has been the most-hit segment.”
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Speaking to IANS on the decline in the share of household saving in the GDO, Sen noted,” It is actually household saving which funds the borrowing needs of government and the borrowing needs of corporates who don’t have savings. If household savings go down, it will either pull investments down or increase the current account deficit.”