Economic slump: Budget 2020 holds not much hope

As the budget session is about to start on 31st January, not much preparedness and zeal can be seen ahead of the budget

NH Web Desk

Economic negligence and incompetence of the Modi Government further pushes back the Indian economy.

As the budget session is about to start on 31st January, not much preparedness and zeal can be seen ahead of the budget.

The economic slowdown in India means hardship for Indians and 2020 brings no respite.

Indian economy undergoes an all-time low with dropping incomes as well as tight-fisted spending, even on essentials such as food.

Government’s economic mismanagement is responsible for much of the slowdown, it has itself fallen victim to these blunders.

With the Indian economy facing another downturn and apparently more serious than the previous one, there are talks about India slipping back in the club of so-called fragile five.

Now, the debate over India's economic slowdown has intensified since the Narendra Modi government released data of advanced GDP estimates saying a growth rate of 5 per cent is expected in 2019-20.

Many believe this estimate is too optimistic and does not reflect the current realities of the Indian economy.

The nominal GDP growth rate is at a 42-year low. The nominal GDP growth rate is considered a closer reflection actual status of economic progress.

At 7.5 per cent in 2019-20, nominal GDP is expected to be worst since 1978 and far below than the government's earlier projection of 12 per cent.

Even at 5 per cent, the inflation-adjusted GDP growth rate is the slowest in 11 years, the concern is not only the declining rate of GDP growth but also key indicators.

Manufacturing is likely to clock a 2 per cent growth in 2019-20 -- lowest in 13 years.

The construction sector is expected to expand at 3.2 per cent -- a sharp decline from 8.7 per cent for 2018-19 -- and this is a six-year low.

Currently, the fiscal deficit of the central government is less than 3.5 per cent of GDP. Consolidated fiscal deficit is likely to remain around 6 per cent of GDP.

Fitch Ratings in November said the consolidated fiscal deficit may be around 7.5 per cent of GDP which is a cause of serious concern.

For the September quarter, the current account deficit was below 1 per cent of GDP. It was 2.9 per cent of GDP in 2018-19.

The current situation is, however, not good news as it is not because of spurt in export but the decline in imports on account of low consumption and demand in the country.

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