ANOTHER GRIM REMINDER

Context:

The economic slowdown of India, whether due to cyclical Downturn or structural factors.

Projections:

IMF projects India's annual GDP at 6.1 %.
World Bank projects India's annual GDP of 6%
Moody's rating agency projects it as 5.8%

Most of the multilateral Agencies call it a structural failure.

Reasons for structural failure :

1.Weak financial sector due to high NPA and high share of NBFCs on banks total credit. NBFCs has borrowed 40% of bank's credit.
It poses broad-based contagion risks.

2. Sharp slowdown in major economies such as the US and Eurozone has spill over effects in India. This scenario has lead to Protectionist policies and trade wars.

Eg: "America first policy" ; "Made in China 2025" policy

3. Poor domestic demand.

4. Poor Industrial growth due to twin balance sheet problem.

5. Poor agricultural growth rate due to poor reforms in the institutional factors like land and credit.

Solutions :

1. Financial sector reforms to solve problem of both banking crisis and economic recession
2. Codification of labour laws and land laws
3. Infrastructure creation
4. Increase the rural demand

Economic cycle :

It is the alternating expansion and contraction of the business or economy.

How the Economic Cycle Works :

The four stages of the economic cycle are also referred to as the business cycle. These four stages are expansion, peak, contraction, and trough.

During the expansion phase, the economy experiences relatively rapid growth, interest rates tend to be low, production increases, and inflationary pressures build. The peak of a cycle is reached when growth hits its maximum rate. Peak growth typically creates some imbalances in the economy that need to be corrected. This correction occurs through a period of contraction when growth slows, employment falls, and prices stagnate. The trough of the cycle is reached when the economy hits a low point and growth begins to recover.

Stages in economic cycle :

Expansion ,peek , recession ,depression, trough and recovery.

Source: THE HINDU

Join Our Telegram

A TURKISH MISADVENTURE

ECONOMICS NOBEL FOR ABHIJIT AND TWO OTHERS

Oceanic Anoxic Event 1a and MASS EXTINCTION

25 Dec, 24
SHARE

Oceanic Anoxic Event 1a from the Paris Basin (Environment) Paper-3 PMP OAE 1a refers to a period during the Cretaceous Period (145 million years ago and ended 66 million years ago) when Earth's oceans became depleted of oxygen, causing a significant disruption in marine life. Cause: The event is believed to have been

Viksit Panchayat Karmayogi (Good governance)

26 Dec, 24
SHARE

Viksit Panchayat Karmayogi (Good governance) Governance GS PAPER-2 PMP Dr. Jitendra Singh launched the ‘Viksit Panchayat Karmayogi’ initiative on Good Governance Day, celebrated to mark the 100th birth anniversary of former Prime Minister Atal Bihari Vajpayee. The initiative, which is part of the broader ‘Prashasan Gaon

Major programmes to control Air Pollution

23 Dec, 24
SHARE

Major programmes to control Air Pollution National Clean Air Programme? It was launched by the Ministry of Environment, Forests and Climate Change (MoEFCC) in January 2019. It is the first-ever effort in the country to frame a national framework for air quality management with a time-bound reduction target. The

Air pollution and Air quality Measures in India

21 Dec, 24
SHARE

Air pollution and Air quality Measures in India (Environment) GS Paper-3 P-M-P Air pollution may be defined as the presence of any solid, liquid or gaseous substance including noise and radioactive radiation in the atmosphere in such concentration that may be directly and/or indirectly injurious to humans or other l

Geopolitical Significance of Ports

20 Dec, 24
SHARE

Geopolitical Significance of Ports (IR) Act as geopolitical assets: Ports enhance the projection of strategic reach, which helps strengthen the country’s control over important sea and energy supply routes. E.g. Indian Navy’s staging base at Agalega Islands will enable marine patrols