India’s broader picture: Fifth largest economy struggles to keep itself functioning

India’s broader picture: Fifth largest economy struggles to keep itself functioning

India economy

Amidst the political disturbances, there’s no denying that the ongoing crisis hard hits the Indian economy. Our economic growth is slowing, and mostly illiberalism hurting investors’ confidence is to be blamed. According to official government data, the growth rate of national income for the second quarter of this year was only 5 percent, down from 8 percent a year before.


The International Monetary Fund’s just-released World Economic Outlook cut India’s growth forecast for 2019 to 6.1 per cent, down from the 7.3 per cent that the organization had predicted in April.


While the economy experiences trickle down after years of steady growth, the recent turnaround is sudden and unexpected, and that a cause for concern.

India’s economy this year struggles through a deep slowdown and a credit crisis, the country has gone from being celebrated as a growing economy to an improbable player. Seldom does a major economy had such an unexpected hit in its fortunes.


In the third quarter, gross domestic product rose 4.5% from a year earlier, about half the pace notched in the first part of 2018. Consumer confidence has tumbled to the lowest level since 2014. The labor market, a vital indicator is also fragile.


Just last year, India was the world’s fastest-growing major economy. The past decade has been all about predictions it would take up an increasing share of global commerce, alongside China and America. So what exactly went wrong?


It is easy to point evidently at the factors that led to the decline, which are:

  • The declining consumer confidence, which reached its lowest level since 2014
  • Country’s broken financial system – Indian banks are currently succumbing to the bad loans that are among the biggest in the world.
  • While considering the recent protests, the trust in the government seems to be declining, at least among major economic actors. This is the indirect indicator of waning confidence, which is often overlooked.
  • Not a cause but more of a result, the rise in unemployment is being considered as a destabilizing factor of the Indian economy. The jobless rate has climbed to a 45-year high of 6.1%.

While history shows robust regimes that have risen after painful recessions, we hope that the current phase of economic disturbance does not adversely impact the sheen of the Indian economy in the long-run.

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