ECONOMIC

SLOWDOWN OF
INDIA GROUP - 9
Parth Gupta
Abhinav Srivastava
Utsab Karmakar
Rohit Saxena
Saurav Viryani
WHAT IS ECONOMY?
GROSS DOMESTIC PRODUCT

Snapshot of the economy at a certain point in time.

 INDIAN ECONOMY

World’s 7th largest economy by

GDP ($2.72 trillion) and 3rd
largest by PPP ($10.5 trillion) as
per IMF report.
CSO (CENTRAL STATISTICAL ORGANIZATION) WHICH MEASURE
GDP HAS
DIVIDED THE INDIAN ECONOMY INTO 3 SECTORS.

PRIMARY (agriculture)
15.4% GDP

SECONDARY (manufacturing)
23% GDP

TERTIARY (service)
61.5% GDP
CHARACTERISTICS OF INDIAN ECONOMY
Indian economy is termed as the developing economy of the world. Some features
that tagged it as a developing economy in the world are

Higher population below poverty line

Poor infrastructure

Agriculture based economy

Lower rate of capital

formation
 SLOWDOWN

WHAT IS
SLOWDOWN IN AN
ECONOMY?
TYPES OF
SLOWDOWN

§ CYCLIC

§ STRUCTURAL
 REASONS FOR SLOWDOWN
COUPLING
HIGH OIL
WITH IRAN
PRICES
SANCTIONS
Saudi Arabia is India used to import
India second- more than 10% of its
biggest oil oil from Iran. But due
supplier after to US pressure, India
Iraq. must reduce imports

WIDEN THE
GULF CURRENT OTHER SECTORS
AND INDUSTRIES
CRISIS ACCOUNT TO BE IMPACTED
DEFICIT
Oil rise here would also
A $10 rise in Brent will lift India’s affect many industries,
annualised import bill by $15 including manufacturing and
billion leading to weakening of aviation, and has
Rupee accelerated inflation.
 RUPEE DEPRECIATION

2019: 1 US$ = 71.70 INR

2017:
1 US$ = 65.0 INR
1993:
1 US$ = 31.7 INR
2018: 1 US$ = 74.0 INR
1985:
1 US$ = 12.0 INR
2013: 1 US$ = 60.0 INR

1991: 1 US$ = 17.9 INR

1971: 1 US$ = 8.39 INR

US-CHINA TRADE WAR
Value of the Rupee: Due to weakening of the US
dollar, which automatically creates a negative impact
on the trade deficit of India, causing a chain reaction
of sorts.

Indian stock markets: Amid concerns over the

global trade war, key indices in the Indian
share market dropped due to the cautious
approach of the investors.
Contents
Here India-US duties: As the United States of
America imposed duties on steel and
aluminium, India now has to pay approximately
$241 million worth of tax to the US.

As far as the manufacturing industry is concerned,

the additional duty imposed could have a
detrimental impact, as the cost of production will go
up due to the rise in the price of raw materials.
IL&FS AND NBFC CRISIS

IL&FS accumulated Rs. Investment in

01 90,000 crores of debt
and failed to repay.
02 complicated projects led
to the crisis.

Short term borrowing High interest paid to

03 and long-term
lending.
04 banks on loans and
locked in capital.
DEMONETIZATION

MSMEs took a hit as Demand collapsed on

01 most of them operate on

cash.
02 rural areas as the entire
rural economy runs on
cash.
Contributed to the freeze
Double Whammy of
03 on investment by
industrial houses and 04 demand collapsing and
supply bottleneck.
corporates.
INCREASING NPAs

NPAs reached record Frauds, Willful defaults

01 high of 11% i.e. Rs. 8.95
Lakh Crore in March’18.
02 added to the increase in
NPAs. E.g. Jet Airways,
Nirav Modi,HIDL & PMC.

Banks tightening lending

03 and repairing balance

sheets by making
provisions for bad loans.
GOODS AND SERVICE TAX

01 Good reform at a wrong

time is always wrong. 02 Flawed implementation.

03 Hampered MSMEs the

most.
CONSEQUENCES
 UNEMPLOYMENT DECLINE IN
GDP

INDUSTRIAL REDUCED
PRODUCTION IMPORTS

AUTOMOBILE DECLINES IN
SALES SAVINGS
 MEASURES

Angel Tax
02 04
03 Merger of
Liquidity Banks
Corporate
Tax Cut 01 Support
 MEASURES
Angel Tax
Angel tax is a term used to
refer to the
income tax payable on
capital raised by unlisted
companies via issue of
shares.
Its exemption will be going
to benefit 21,417 startups
in India.
It has also been decided
to set up a dedicated cell
under the member of
CBDT
Corporate Tax Cut
A corporate tax is a direct
tax imposed by a
jurisdiction on the income
or capital of corporations
or analogous legal entities.
The government slashed
the corporate tax rate to
22% from 30% for existing
companies, and to 15%
from 25% for new
manufacturing companies
 Measures related to Banks/NBFCs/MSMEs
Upfront capital infusion of
Banks have decided to Rs 70,000 crore into public
pass on rate cuts through sector banks, a move
MCLR reduction to aimed at boosting lending
benefit all borrowers. and improving liquidity
situation.

Reduced EMI for

The move is expected
housing loans,
to generate an
vehicles and other
additional lending and
retail loans by directly
liquidity in the financial
linking repo rate to
system to the tune of
interest rates.
Rs 5 lakh crore.
 MERGER OF BANKS

The government announced 10 public sector banks into four.

 SHORT TERM REFORMS LONG TERM REFORMS

Action is needed to reduce the

Strengthening the bankruptcy
repo rate.. Banks will have to
code would be a game-changer for
transmit rate reductions, requiring
banks in resolving stressed
an institutional mechanism.
assets.

The rupee has to be

Industries development to
allowed to depreciate
generate employment.
slowly since the rising real
Industries give jobs to
effective exchange rate has
masses.
hurt exports.

Focus on agriculture policy, which

Monetize government and PSU land requires a tilt away from the price- and
& fixed assets as rapidly as possible. subsidy-based current regime to a
The goal of divesting government strategy-based one on public
equity in public enterprises investment in agriculture.
 CONCLUSION

Tumultuous time for the

01
economy.

Revival will require a

02
minimum of 4-6 quarters.

Need for public investment to

03
accelerate consumption.

Infrastructure development
04 initiatives provide large scale
employment.
Source:
ILFS AND NBFC
• https://economictimes.indiatimes.com/markets/stocks/news/nbfc-crisis-is-far-from-
over/articleshow/71717424.cms?from=

• https://economictimes.indiatimes.com/industry/banking/finance/banking/gross-npas-of-public-sector-
banks-have-declined-by-over-rs-89000-cr-till-march-govt/articleshow/70379980.cms?from=mdr

• https://economictimes.indiatimes.com/industry/banking/finance/gross-npas-of-banks-may-fall-to-8-by-
march-2020-report/articleshow/71395923.cms?from=mdr

• https://economictimes.indiatimes.com/news/company/corporate-trends/ilfs-board-likely-to-meet-again-
this-week/articleshow/66105918.cms?from=mdr

• https://www.business-standard.com/article/economy-policy/gdp-data-confirms-demand-slowdown-
consumption-expenditure-at-17-qtr-low-119083001449_1.html
Source:
MEASURES

• https://www.deccanherald.com/liveblog/highlights-nirmala-sitharaman-announces-new-measures-to-
boost-economy-756436.html#2

• https://www.indiatoday.in/business/story/corporate-tax-cut-likely-to-attract-foreign-firms-to-india-nirmala-
sitharaman-1602028-2019-09-22

• https://economictimes.indiatimes.com/news/economy/policy/govt-to-upfront-infuse-rs-70000-cr-capital-
into-public-sector-banks/articleshow/70804971.cms?from

CONSEQUENCES

• https://indianexpress.com/article/explained/explained-how-to-read-rbis-monetary-policy-review-6053479/

• https://economicoutlook.cmie.com/kommon/bin/sr.php?kall=wshreport&nvdt=20191112154502643&nvpc=
035000000000&nvtype=INSIGHTS&oporder=1&subcode=010300000000

• https://www.deccanherald.com/business/economy-business/retail-inflation-jumps-to-16-mth-high-of-462-
pc-in-oct-775964.html
Thank You