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Showing posts from September, 2020

Government should Spend More to save the economy

  As the GDP numbers are out for the Indian economy for the quarter ending June 2020 (Q1), we were staring at a historic low of negative 23.9 percent GDP. This is the first time since independence that India has seen such a sharp contraction in growth, thereby earning the dubious distinction of ‘fastest shrinking major economy’ in the world. Even though the loss in GDP growth was on expected lines owing to nationwide lockdowns since March, such a sharp contraction is a cause for concern. It now calls for careful planning for corrective action taking into account the options available. According to the recent National Statistical Organisation (NSO) data both private consumption and investment contracted by 26.7 percent and 16.3 percent respectively. Private Consumption is the engine of India’s GDP growth which has fallen from 56.23 percent in Q1 of 2018-19 to 54.3 percent in 2020-21. Similarly, investment by private entities, the Gross Fixed Capital Formation (GFCF) has also fal