Current State of Indian Economy

The state of the Indian Economy has been the buzzword for all and leading business newspapers of the world carry opinions by eminent economists on what exactly is happening with Indian Economy.

India is a complex state with diverse people, diverse choices and different levels of understanding and knowledge amongst the population. Everybody has their own understanding of how exactly the economy runs and what to do to improve it. Before COVID-19 struck, Indian economy was on a downturn. GDP growth had stagnated and industrial indicators were lagging. Consumption companies were under stress as auto sales were lagging.

Then came COVID. Economy came to a halt. Jobs were lost, lives lost and livelihoods were snatched. The engine that runs the country had stopped. It was like it had been running for many years and this stop may help it regain its energy and upswing. Government of India kept spending throughout the COVID crisis by supplying food grains to the poor, direct cash transfers for ladies and farmers. Government knew that spending was essential to regain confidence of the private sector to invest again in the economy.

After restrictions were lifted, India registered contraction of more than 20% in GDP which was as expected. Government of India and RBI decided to unleash liquidity in the market to help restart the economy. Loan rates were at an all-time low because of low CRR by RBI, government decided to spend on infrastructure to help generate jobs and give money in the hands of the people. LTC voucher scheme was launched to increase spending as government wanted taxes to sustain rapid pace of spending. Good news came, GST collection touched all-time high in January, Industrial production grew and leading brokerages gave targets of growth for Indian economy in 10% plus range for Q4 of FY 2021–22. Landmark budget was announced by the Government for next year with thrust on improving healthcare and infrastructure, which will allow economy to rebound and regain its momentum. More cash was put into hands of people by levying taxes on savings instruments and government clearly wanted to discourage too much saving by the people

To conclude, Indian economy has already seen its worst, now is the time for mega acceleration and push by the government and the private sector also to keep up the pace of investment and liquidity in the market to boost spending and increase credit outflow so that infrastructure is given a boost and it can act as a catalyst to take the Indian Economy to even greater heights. RBI and Govt of India is doing a good job at it and now is the time for Private sector to pitch in and support the spending push by the Government of India.