The term “Indian economy” refers to the economic system of India, which is one of the largest and fastest-growing economies in the world. Ranked as the fifth-largest by nominal GDP, India is an emerging economic powerhouse with a diverse economic structure. As a developing country, India follows a mixed economy model, incorporating both public and private sector elements. While the government plays a significant role in regulating and overseeing essential sectors like defense, infrastructure, and transportation, it also encourages private enterprise and foreign investment to drive growth in other industries.
Historically, India’s economy was predominantly agrarian, with a large portion of the population engaged in agriculture. However, over the past few decades, the country has undergone significant economic transformations. This change was marked by the liberalization of the economy in the 1990s, which opened up markets, reduced trade barriers, and attracted foreign direct investment (FDI). These reforms played a key role in integrating India into the global economy and propelled growth in sectors such as technology, manufacturing, and services.
The services sector, particularly information technology (IT), telecommunications, and business process outsourcing (BPO), has emerged as a cornerstone of the Indian economy. In parallel, India’s industrial base has also expanded, with key areas like automobile manufacturing, pharmaceuticals, and steel production contributing to its development. This growth is further fueled by India’s large and growing domestic market, driven by an expanding middle class, rapid urbanization, and a young labor force.
India’s trade relations have evolved over the years, with significant partnerships formed with countries such as the United States, the European Union, and China. However, India faces a growing trade imbalance with China, importing more than it exports. Additionally, the depreciation of the Indian rupee has led to challenges like inflation and rising import costs.
The GST collections during Covid19 in 2020 have approximately reduced by 12 percent compared with the collections in the same month in 2019. Given the magnitude and scale of Covid19 attack on all sectors of the economy, that it has shrunk by 12 percent is certainly a modest impact, else the reduction would have been much more drastic than 12 percent. The only hope for revival of the economy is through improved GST collections. Now that the lockdown has been lifted though partially, the GST collections are improving. Which implies transactions are taking place and economy is growing. Comparing the GST revenue collections during Covid19, in June 2020, Rs. 90917 crores collected formed 91% of the collection in June 2019, the GST revenue collected in July 2020 being Rs. 87422 crores formed 86 percent of what was collected in July 2019, and the GST revenue collected in Aug 2020 being Rs. 86,449 crores formed 88% of what was collected in Aug 2019. Thus, despite the severity of Covid19 in India, its impact on GST revenues has been modest. Given the size of the economy in terms of population, and given that India could contain the mortality to less than 2 percent due to covid19, the economy has done fairly well, else the GST revenue collections would have fallen drastically. There is thus hope. More than growth seen in GDP, the economy should focus more on distribution especially during Covid19 crisis.
Whether there is a K shaped recovery (whatever that is), or the economy keeps going down while the Covid curve keeps going up, India is getting what Hindus voted for.
The Hindus voted for Hindutva and that is what they are getting. What is Hindutva ? The average Hindu does not know. He has the vague understanding it is about standing up for Hindus against Muslims, and they think Modi is doing that. They think the CAA-NRC was about that. In fact, some of them say that Modi was the first Hindu ruler in 1000 years. Any alternative would mean the end of Hindu rule, so one has to keep voting for Modi.
The Hindu may be lying in the gutter but Modi has told him the Hindu is the vishwa guru, and the rest of the world is lying in the gutter due to Covid. Modi said India helped 140 countries out of 125 with Covid. It is like the story of the lunatic thinking the outside world is insane. The Hindus have built an alternative reality around Modi.
India is a dharmaocracy, not a democracy. One BJP appointed JNU professor, Makarande Paranjape (a RSS spokesman) wrote that India is not like other countries, it works on dharma. In that, economy and jobs do not figure. K shaped recovery, or no recovery, India will roll ahead with Om and dharma. This is the Hindu psyche.
I am so glad you brought up this Charlatan and pseudo-intellectual named Makarande Paranjape — he is the most dangerous type. He speaks very high flung English which initially sounds very neutral and convincing, but he eventually comes out of his disguise and can be seen for what he really is — a hater who has an agenda OR very clearly has been planted here by the RSS. Luckily he got himself kicked out of JNU and is lying dormant somewhere.
Credit to Rasgolla here- Compiled his comments as a single read . Cannot say it better !
The govt. has prioritised what voters want : Ram temple, beat up minorities, wallow in fake news. They were rewarded with a second term.
You analysis of the evolution of the west is correct : agriculture to manufacturing, then to service.
But the extension to India is inaccurate. Here it is agriculture straight to service, with little manufacturing ever. This is peculiar and is not sustainable. The bulk of the population is kept illiterate, due to the caste system and its values. India is unique, never compare with the west, just because you are living there.
Rejith R
6 September, 2020 at 3:24 pm
At least the US Govt is doing something to put money it the hands of the people. What is this Indian counter part doing telling people to bang thalis and light diyas.
Reply
Avatarrasgolla
6 September, 2020 at 7:02 pm
Thank you for your moralising. You seem to make an effort always to put a positive spin on Modi’s failures. But in effect you have no substance. Now your argument is the crumbling economy ‘is the same everywhere.’ It is an Act of God.
India is going down more than other countries. The proof ? In no country was a shut down made in 4 hours, and people were forced to march 1600 km to their homes. Not in America, UK. NZ, Arabia, Iran, Russia, African countries…. The Indian Covid curve is going upwards still, most countries have peaked and brought it down (including China). One govt. Babu when asked some months back when the curve will peak in India ; he replied it will never reach a peak in India ! That is the reality too.
India is going down hill for 4 reasons all due to Modi, RSS-BJP. (1) economy was undone by demonetisation even before Covid, claimed to be done to root out black money, but in reality to win UP elections by keeping put opposition from the new notes; corruption is rampant still rampant (2) brainless and insensitive handling of Covid, and it is out of control, India is heading to be world number 1 (3) China takes land and your chowkidar keeps quiet (4) instead of attending to economy, Covid and China, Modi and BJP misspent all their energies on beating about minorities.
Is this the same everywhere ? Are all countries going downhill like India ? Are all Indians dumb bhakts like you ?
The BJP did not get elected to deliver on economy, it got there because beating up Muslims appealed to Hindus. All the people who voted for the BJP went with it because of Hindu communalism. There is no other reason. That is the reason you voted for the BJP
Than you very much Bullseye. I get a lot of abuse, and I am a hated figure. But I offer analysis that independent journalists should give. Today, they are either sycophants or they live in fear.
I am hated because I pin the blame for India’s failures squarely on Hindus. Not all Hindus are malevolent militants but it is a fact that such a type of Hindu is ruling.
Well, since militant Hindus are ruling, and they claim exclusivity to the country, they have to take exclusive responsibility for its failures. We cannot blame the country’s failures on Muslims, Sikhs and Christians.
I do apologise to non-Hindutva Hindus for my apparently wholesale condemnation of Hindus, but it is not directed at them.
Whether India’s recovery will be K, L, V or U shaped remains to be seen. What the current state of affairs does show is that socialism and democracy are incompatible. Consider China. The country made an amazing recovery but that was only because the govt exercises complete power over the people. Almost every democratic country on the other hand continues to suffer.
India has the same problem scope as China (i.e. insane population density, rampant poverty) but the govt has none of the will or state mechanisms to deal with the crisis. The Indian population is simply too indisciplined to follow the rules and do the needful. What was needed here was to lock people into their homes at gunpoint if needed. But, then the opposition would’ve called it “barbaric” “inhuman” and the incumbent would’ve practically given away the next election on a silver platter.
Therein lies the problem with a multiparty system — you need one, unchallenged voice to take the charge, which simply isn’t possible in India without the fear of reprisals.
This is an evasive analysis. You make out China succeeded in Covid control because it is not a democracy and so they could take sweeping measures, but India being the liberal democracy that it is, (like the west), cannot do the same.
That is faulty analysis. Other countries that are democracies but that had good leadership like Germany, NZ, Czech Republic etc. also flattened the curve without holding people at gunpoint.
In India, itself, I read one state, Kerala managed to control Covid without gunpoint, and to its credit, it did not turn out the migrant workers, but fed and housed them. That is because their leadership has people’s welfare as a priority. Kerala’s health minister was interviewed on the BBC and was asked whether she could give tips to Britain. The World Bank called up the Kerala govt. and held meetings to understand how they managed it.
The worst performing states are the BJP states of the cow belt. In Kerala, their health minister, Shailaja started planning in February 2020 after reading about in China. Whereas in Delhi at that period, the govt. was fighting JNU, Shaheen Bagh ladies and organising the Delhi riot, and use Covid to spread hatred of Muslims. They had different priorities. That is the reason for India’s overall failure. There is no need to make excuses that ‘we failed because we are a liberal democracy like the west’.
‘The Indian population is simply too indisciplined to follow the rules and do the needful. What was needed here was to lock people into their homes at gunpoint if needed. ‘. Well, the RSS and BJP is very disciplined when it comes to organising riots and winning elections by hook and crook.
I have been voting for erstwhile Jan Sangh and BJP since 1971. I am compelled to admit that Modi 2.0 has been sub-optimal, thanks to the bad choice of finance minister and death of people like Sushma Swaraj and Arun Jaitley. Circumstances have also added fule to the fire such as a global economy which was already slowing down, and pandemic, and chinese attack on India, which is draining the already meagre resources.
The Head of the Government does not seem to take anyone’s advice in matters of economics. The finance minister’s gift of Rs.1.45 trillion to corporates by way of reduction of corporation tax has made take over of smaller companies attractive for the whales and sharks.
Even after the great depression of 1930, in due course both the US and the other countries recovered. So, India too will recover. What cannot be cured has to be endured. There is no magic wand to change K recovery into V recovery.
I am wondering whom shall I vote for in the next election? Do the opposition parties in India give me a better choice? I think not.
‘I have been voting for erstwhile Jan Sangh and BJP since 1971. ‘
What was the reason ? Hindu communalism ? What attracted you to fascists like the RSS ?
China’s growth story cannot be replicated by India. So 5 tn $ economy will take 10yrs rather than 5.
Govt can do well to 1.
improve relationship between industrialists and Babus, most of whom still behave like colonial British ICS. And treat private sect employees and executive as servant.
2. Open up complexity and ease excessive taxation of mining sector.
3. And promote agriculture. India has large death of cultivable land, and can be a net exporter of food.
4. get technocrats in key ministries.
Rest leave it to Indian entrepreneurship. Remove barriers, and bottlenecks. Country will flourish economically.
Your first statement is correct. Even without Covid a 5 trillion target was out of reach – due to the mess created by demonetisation in Modi 1.
However, the rest of your analysis is incorrect.
Babus are a problem, but India’s problem with the BJP is open encouragement of crony capitalism – a nexus has been built with Ambani, Adani and the BJP. It has become a corrupt Gujarat mafia and oligarchy.
Promoting agriculture means it will remain a developing country. There is no shortage of food, it rots due to lack of storage facilities.
Getting technocrats into key ministries is not possible. It is vetted by the RSS, it has to have their approval. We shall not see meritorious technocrats like Dr. Kalam and Homi Bhaba types again. When Hindus opted to accept a RSS run country, they signed their souls away. India has to accept the decline as the price for Hindus endorsing fascists.
First of all this article really needs to make sense , secondly No Journalist make assumptions the data was accumulated from NSO,IMF, RBI, etc , For ex it was NSO projection of GDP that got such controversy perhaps this media house should request PM to Rehabilitate his stooge there , Also this article is bullshit
Really dude! So original.. Author seems to be on staple diet of US newspapers. A day after reading about letter shaped economic recovery in major US publications, not so surprising to see similar article here. Hopefully someday we will stop comparing or ‘inspired by’ works of others and start printing some authentic or original idea.
A typical doomsday article with strong bias towards India…. perhaps the desperate theme to write upon to increase their readership. As always it will be stupid to look at one side of the equation.
They are expecting bumper crops this year despite the challenges so that should be a positive for the economy.
This is a better article by Ninan (sometimes he yields to Modi sycophancy).
This encourages escapism through the politics and economics of nationalism, made worse by tribalism or nativism, the package accompanied inevitably by the erosion of institutional bulwarks and therefore state capture by powerful businessmen.
Correct. That is what we see in India. The only beneficiaries are Ambani, Adani, BJP and RSS top echelons, and the rest have seen their jobs go and incomes shrink. Hindutva is used as a concealing substitute for economic failure.
All the same, with the destruction of the Indian economy, I wish for Modi and Sitaraman to reign one more term. They should carry the effects of what they did and Hindus who supported then should learn, it would be unfair that another party inherits their problems.
In my observation, a little bit of power and money goes to the heads of Hindus, and they start bullying minorities. The economic growth and wealth created by MMS went to the heads of the Hindus, and ironically they turned against MMS, as they got greedy and thought their Hindu strongman would do even better and catapult them to a Hindu superpower. That is when it started going wrong for India.
With a K shaped recovery and 3% growth, we are back to the days of Hindu growth, then at least Hindus will not raise their heads against minorities. That is a silver lining I am content with 3% growth.
Well reviewed ! Perfect assessment . MMS made it all look possible and the Sanghis thought it would be a steal and any monkey could do it .
So enter MOXI
They damned MMS as a silent specatator, Mauni Baba. It is clear he was the architect of India’s growth. But still they now prefer their chai wallah over Dr. MMS. Why ? Because the chai wallah is Hindu, while MMS is Sikh and Sonia is Christian. They would rather go with one of the Hindus even if he is incompetetent, because he has made them feel Hindus are on the world stage.
We’re going down the hell-hole while Modi, Adani and Ambani are on the rise.. None of them deal with competition sportingly either, so nothing will change in that regard! Not even the courts will not save the common man. In fact, the CJI actually praised Arun Mishra for being ‘so strong’ to pass clearly-biased judgments that have ensured ‘Ache Din’ for the trio that are taking their personal agenda to new heights, while the rest of us pay the price!!!
All I can say is that how lockdown leading to sops by governments tell why socialism failed miserably. If people cannot read between the lines of K theory, professors and economists keep writing articles after article, with no solutions in place. Economy revival needs banks in good shape. Food security need to be protected. As much as self dependent on defence material is as important. Atmanirbhar is a good vision, but certainly need a planned approach in a balanced manner.
Self reliance or reliance on Reliance ?
Socialists are not wrong either. Crony capitalism leads to lot monopolies and gross inequality. That creates problems.
The government would prioritise what voters want, it used be agriculture earlier with parties announcing loan waiver and similar measures in their election manifesto, pay revision for government servants and so on. It is private jobs
Now so the industries would get sops and the ones for agriculture , pay commission , etc would be reduced to negligible amounts in future.
The cabal of leaders claiming to represent farmers or industrialists would only get as much as they can back up by means of people and votes. Further down the line Indian industrialists would start looking to dominate global markets as their western peers did with creation of WTO. The phases of illiterate population working in farms to semi educated population working in factories to educated population demanding service sector jobs while looking at agriculture with disdain is similar for majority of population of any country. This would be followed by migration of jobs and industries to countries with low labour costs and the reversal of the socio economic conditions of the host country which is our distant future and the also the near future of the West. The best part is there is nothing we can do about it, all social and economic measures would only delay or accelerate our movement from one phase to another.
The govt. has prioritised what voters want : Ram temple, beat up minorities, wallow in fake news. They were rewarded with a second term.
You analysis of the evolution of the west is correct : agriculture to manufacturing, then to service.
But the extension to India is inaccurate. Here it is agriculture straight to service, with little manufacturing ever. This is peculiar and is not sustainable. The bulk of the population is kept illiterate, due to the caste system and its values. India is unique, never compare with the west, just because you are living there.
Leftism, ideal of equality is evil, based on green eyed envy. Media knows envy sells. That’s why most media is left.
Stock markets going up corresponds to goods and services being produced. It’s 24×7 examination by valuations and perceived valuations.
Stock markets are not as silly as left wing journalists. Stock markets going up is because crude is down, a critical factor in India
Dont worry the stock market will collapse too, its just a matter of time, with increased money supply we see a soaring stock market, but this wont last forever.
Indian economy is W shape generally trending up believe me. In a hundred years it would have economy 5 times US China and EU combined
Indian government is selling every government firms this is the worst government.in which GDP and temperature of Antarctica is same
When the world economy crashed in 2008, we escaped relatively unscathed. So the argument that the world economy is in tatters and hence our underperformance is justified is moot. I vote for BJP too but I accept that Improvement begins with this acceptance that economy has been poorly handled by the BJP. If you are unable to see that, you clearly are more invested in a political party than the country.
The BJP did not get elected to deliver on economy, it got there because beating up Muslims appealed to Hindus. All the people who voted for the BJP went with it because of Hindu communalism. There is no other reason. That is the reason you voted for the BJP.
As you see the trend over last few years, I think the government has decided to follow the south korea model to fight out of this economic slump. They do not believe the bureaucracy can help, so they are creating chaebols for communication, retail, infrastructure, banking etc. These will be Indian groups. If it works we will come out on a high in the next 10 years with a few powerful groups driving government agenda. If it does not we will go back 50 years with a license Raj again. It’s a bold move with associated risks. But this government has clearly given a thumbs down to our bureaucracy being able to get us out of this economic slump.
Why people compare India with developed nations where there is accountability. In India there is no accountability . All the country’s were doing well before Covid 19. India is not doing well economically from 2016. Govt. has no money to spend on people but has money to buy military equipments and to buy personal jet for the Prime Minister of this bankrupt Country. People are suffering with huge job losses and businesses are getting closed but our Nero is talking and doing something not relevant to the Country.
There is a video of Nero boasting that be closed 3 lakh companies after demonetisation. He said the ones that closed ran on black money.
Of course 3 lakh companies running on white money were not created. Instead, a company was created for Anil Ambani with public money.
Future Group had accumulated losses. Maybe due to mismanagement of funds or most probably due to muscle power of guys like Amazon (Flipkart also buckled down under the heavy discount schemes of Amazon) and vivid 19 played its part. Amazon was eying to buy Future Group, now at least Reliance has taken it over. At least the Big Bazaar brand is with an Indian based firm.
When I hear “experts” commenting on the state of Indian economy with their own tidbits of advice, mostly what is not done and what can be done, to revive it, we get an impression that all is downhill in India while the rest of the world is dancing. I am here in the US seeing and hearing first hand on the state of the largest economy, by miles, in the world. Briefly, the US, among other “stimulating” measures, has already printed and pumped in over three trillion dollars into the economy by way of revival packages – direct money transfers, MSMR support, income support, soft loans, moratorium and all such were done pronto. There is promise of more. But the commentary here is not different from that in India. The general atmosphere is ‘Dil maange more”. Joblessness figures are fluctuating between worse to bad.
Yes, there are hardships. We have to work through it. A plethora of experts can do very little. The people have to do it.
I hope we see the glass half full back home.
At least the US Govt is doing something to put money it the hands of the people. What is this Indian counter part doing telling people to bang thalis and light diyas.
Thank you for your moralising. You seem to make an effort always to put a positive spin on Modi’s failures. But in effect you have no substance. Now your argument is the crumbling economy ‘is the same everywhere.’ It is an Act of God.
India is going down more than other countries. The proof ? In no country was a shut down made in 4 hours, and people were forced to march 600 km to their homes. Not in America, UK. NZ, Arabia, Iran, Russia, African countries…. The Indian Covid curve is going upwards still, most countries have peaked and brought it down (including China). One govt. Babu when asked some months back when the curve will peak in India ; he replied it will never reach a peak in India ! That is the reality too.
India is going down hill for 4 reasons all due to Modi, RSS-BJP. (1) economy was undone by demonetisation even before Covid, claimed to be done to root out black money, but in reality to win UP elections by keeping put opposition from the new notes; corruption is rampant still rampant (2) brainless and insensitive handling of Covid, and it is out of control, India is heading to be world number 1 (3) China takes land and your chowkidar keeps quiet (4) instead of attending to economy, Covid and China, Modi and BJP misspent all their energies on beating about minorities.
Is this the same everywhere ? Are all countries going downhill like India ? Are all Indians dumb bhakts like you ?
Absolutely true ?
Current economic crisis wide open, how to bridge gap of distribution of wealth.
When u r fighting, u need to loose somewhere. War expenses. If Market comes down again China may make investmentd in stock market indirectly.
At least give credit to the original poster: Ivan the K and Barry Ritholtz.
The print is taking plagiarism to a new K level.
Joe Biden is also saying that the US is experiencing K-shaped recovery.
And so what Mr Pattabiraman A K ? If the US recovery is badly designed, hurts the poor and worsens inequality, should India’s be bad too ?
Pathetic Mr Pattabiraman A K !
Not just India. US is also in the same boat.
But US is a developed country and we haven’t reached development yet !!
Mr Srinivas : The US has a somewhat better safety net whilst India has none. So it is foolish to imply that others are suffering too so India should let its government off the hook.
At the end of the pandemic,2 monsters may emerge,one Adani,and another ambani,and ordinary citizens may become lilliputs.
Very Rich Content in this article and very useful.
You people always try to be smart but fail as damp squib.
Perhaps it serves the govt if the curve takes a K shape. Already, signs are very evident. With privatisation of some non-viable PS banks, the efforts will be more or less complete. No further control on Priority sector lending, advances to agriculture and allied activities slashed, more farmer distress, more suicides, more reckless lendings to large industries, startups, a host of unreliable services etc.
The government is always there to bail out huge banks in case of failures ( YES Bank). A swifter way to attaining 5 trillion economy.
Prof OPVerma Economist Journalist: Your observation is correct.
Govt must be vigilant to narrow the rich -poor gap. But then K- shaped economy is still better than importing everything from Land grabber China n then using those funds to bully us.
Our rich industrialists must in return do all they can to shoulder their corporate responsibilty. Spend on in house research to make India compete Rouge state next door.
Without meaningful economic growth, future Indians will find their whole life being spent in indebtedness – debt for education, debt for house, debt for the basic necessities of life. This debt will crush most of those who are going to assume it because a low growth rate means lower paying jobs and lower pay means longer duration needed to repay your debts. It will also leave behind all those who will have no access to such funds. In both cases, economic freedom enjoyed by previous generations will be lost and loss of freedom will be followed by loss of faith – faith in the Indian story, faith in a better tomorrow for ourselves and our children. The widening gap between haves and have-nots will also reduce respect in the mind of those left behind for the niceties of law and decent behaviour with desperate people resorting to desperate measures including illegal ones. Our democracy, our republic, rule of law, our children’s future, our whole way of life is in jeopardy. I am afraid we are in for a world of pain in the next 20 years or so. God save India and Indians.
Serves Indians right for procreating without limits. Stop making babies and see the change.
So how many babies did you make Me Vish ? I assume though that you can do whatever needs to be done to create babies ..
I understand that Indian economy is in a problem. But I also understand that the world economy is in a deep crisis. I also understand that US stock markets also are peaking like India. I understand there are job losses in India. But I also understand that US, UK and other western nations have suffered as well. What I cannot understand is this stupid attempt to blame the pandemic induced devastation on the government. Mind my words, Indians understand. This attempt will NOT succeed. Its a global curse, with global repurcussions. RBI has done a good job.
India GDP had dropped to 3.1 even before pandemic, unplanned lockdown destroyed everything..
We cannot afford as bad a performance as developed countries, we’re still very very poor. They can recover well, we can’t. Plus, we didn’t do as badly in 2009 economic crisis either unlike other countries. I understand you support the BJP (i do too) but as an educated man, its my duty to point out a wrong when I see one.
Just my opinion, sir.
Abhinav
Mr Abhinav Banaras: You correctly write:
“.. we didn’t do as badly in 2009 economic crisis either unlike other countries ..”
But you forget one key ingredient in that story with a happy ending: the steady hand of economist Dr Manmohan Singh. Today, the economy is sadly in the hands of quacks like Anil Bokil of Artha kranti and Baba Ramdev, the men who convinced our Delhi University graduate to demonetise – against the advice of professional economists like Dr Raghuram Rajan, Arvind Subramanian, Urjit Patel etc. who were sidelined.
Supporting the BJP is essentially handing power to an autocratic bunch of Gujarati fascists. And the economic and social disasters are there for all to see.
Hi bhakt. I have a question for you.
How does Modi’s asshole taste??? You have licked it a lot,isn’t it???