CRITIQUES OF ECONOMIC

REFORMS (2010-19), ANALYSE MACRO

ECONOMIC INDICATOR
BY
TANVEE BOSE 8844
KHANMUNGLA KHANGRAH 8845
ANKUR SAHU 8847
ASHUTOSH SAWANT 8848
RESHMA V 8850
 BANKING AND CORPORATE REFORMS:
• India’s GDP forecast for 2019-2020 to 5.8% from estimate of 6.2%
• Central bank cut the country’s growth forecast for FY20 to 6.1% from
6.8% estimated earlier.
• This was all due to-
No new sources of growth.
Ill conceived demonetization .
Poorly executed GST roll-out.
• Amalgamation of public sector banks
Financial conflicts such as intense disputes between banks
Internal hierarchical muddle
Ineffective recovery steps
•Non performing assets
Increased by 6.2lakh crore between march 2015 and march 2018.
Due to:
Faulty credit management
lack of professionalism
Misutilisation of loans
Trade Policy and reforms:
• Foreign direct investment:
Affected small investors
In India 100% ownership is allowed in mining, oil, gas, electricity, healthcare and
waste management, while agriculture sector and forestry’s cap is at 50%, and
banking (87%), insurance (26%), media (63%)
India’s regulatory policies like procedural delays, complex rules, obligations had
played role in not investing in India.
As per RBI study group, from the sectoral perspective, FDI in India mainly flowed
into service sector (41%), followed by manufacturing (23%), however the share
of services declined over the years from almost 57% in 2006-07 to about 30% in
2011, while the share of manufacturing and other’s largely comprising electricity
and other power generation increased over the same period
• Financial Intitutional Investors
Excess liquidity creating inflation
Adverse impact on exports
•BOP AND CAD:
The widening of CAD is due to fall in household financial savings and
corporate investments.
India’s CAD has increased sharply to 4.8 per cent of GDP in 2012–2013 which
was about 2 per cent of GDP in the quarter ended December 2017 which is
further expected to increase due to rising oil prices after staying below 1.6 per
cent of GDP during the 1991–2008. As expected, the CAD increased to 2.7 per
cent of GDP in first-half of 2018–2019 which further widened to 2.9 per cent
of the GDP in the second-quarter of the fiscal from 1.8 per cent in the
corresponding period of 2017–2018
 Industrial policy Reforms:
• Micro,small and medium enterprises:
GST ruined small businesses,
Liquidity crunch is another trigger behind the economy slowdown,
 Due to demonatisation, major impact was on unorganized, unregistered
sector as there output fell
Credit related issues
MUDRA- failure of banking sector
• Labour Reforms:
Labour market reforms are imperative – jobless growth or job loss
growth
 Unemployment in the unorganized sector
•Make In India
Labour laws in the countries are still conducive to the make in India
Campaign.
• Govt is unable to shut down the sick industries.
Fiscal Policy Reforms:
• India's GDP growth has fallen to a six-year low 5 per cent.
• Fiscal Responsibility and Budget Management
Act(FRBM):
fiscal deficit rose to 6.0 per cent of GDP in 2008-09 and to 6.5 per cent of GDP
in 2009-10.
• Kelkar Committee report on FRBM
However, it was reduced by the 4.8 per cent in 2010-11 and to 4.6 per cent of
GDP in 2011 -12, but it again rose to 5.7% of GDP in 2011 -12 and 5.1 % in 2012-
13. In his budget for 2013-14, the Finance Minister has set the target of fiscal
deficit for 2013-14 at 4.8% of GDP.
• Cut on subsidies- couldn’t gain its momentum in the later years
• Unemployment arising out of large scale retrenchment of workers
The fountainhead of India’s economic malise:
Manmohan Singh
• By now the facts are evident to all- nominal GDP growth is at a 15-year
low;
• unemployment is at a 45-year high;
• household consumption is at a four-decade low;
• bad loans in banks are at an all-time high;
• growth in electricity generation is at a 15-year low- the list of highs and
lows is long and distressing
• Industrialists live in fear