In the middle of this Covid-19 crisis, it is quite noticeable that the future is jumbled up with a lot of uncertainties. But the certain thing is its devastating impact on India’s economy. In the last week, the international ratings agency, Moody’s, had assessed India’s sovereign debt ratings and declared the result as down falling and negative.
However, the coronavirus pandemic is not the only reason for the downfall of Indian economy. “It was not driven by the impact of the pandemic. Rather, the pandemic amplifies vulnerabilities in India’s credit profile that were present and building before the shock”, read Moody’s statement. Before the pandemic, in 2019, during the first quarter, the GDP of India increased by 5.8%. Immediately after that in the second quarter, the GDP growth rate fell to 4.5%.
The present rating claims that the growth rate fell to 2.5%—decrease in the level of consumption, lack of means to energize private investments, poor implementation of policies, tension in the financial sector, stagnant exports and excess spending by the government are some of the reasons stated for the downfall. “Prolonged financial stress among rural households, weak job creation, and more recently, a credit crunch among non-bank financial institutions have increased the probability of a more entranced weakening” said Moody’s.
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A previous record shows that the Indian economy was in a balanced and strong state since 2014. It is only from 2017 that it started to slow down mainly because of the two major shocks—demonetization in 2016 and the introduction of GST in 2017. It is now predicted that even after this pandemic gets over, India will still be on the verge of downfall.
There are several reasons to why India is unable to fix its economy and that includes the fact that the people of the country as well as the government nowhere cares for the economy. The citizens are so well aware and interested about all the things that are happening around, but when it comes to knowing about their economy, their callousness in well marked. Underemployment is yet another reason.
The youth of the generation who are mostly busy in their world of fantasies will surely give rise to a generation full of literate yet underemployed people. A per month salary of an Indian graduate is about Rs 7500, which is the minimum income of a McDonald’s worker in his single 8hr shift. Lack of innovation in Indian industries is also a problem. The problem of course lies in the mindset of the business owners. Their main motive is to make their children their successor, which makes them rich without any hard work. They do not think whether or not they are capable for handling that place. And if such happens, expecting innovations from these people is a lie.
According to Moody’s report, India should act more seriously and change their mindset to fix its economy. “We expect the government will announce additional measures in the future” it stated. And if not in the upcoming time, the country will suffer miserably.