CURRENT TRENDS IN INDIAN ECONOMY

Presented by:
Shaheen Fathima
Vtp no.1366

To : Dr.Manoj
 INTRODUCTION
INTRODUCTION
The Indian economy has experienced large swings in growth and inflation over
the past decade.
GDP growth weakened sharply during the global financial crisis (GFC) due to a
decline in export demand from advanced economies and a slump in investment.
Nonetheless, activity rebounded and high inflation became entrenched after the
GFC, supported by an increase in government spending and expansionary
monetary policy.
While growth subsequently softened due to the withdrawal of stimulus and the
rising price of crude oil, more recently, conditions have improved along several
dimensions.
GDP growth has trended higher, inflation has come down, external fragilities
(relating to currency volatility and the size of the current account deficit) have
abated and the fiscal position has become more sustainable.
The global economic shock that has been caused by the COVID-19
crisis is now comparable to the post-WWII world economy. With
the global GDP set to reduce by at least 3.5% in 2020, it comes as
no surprise that economically, we are facing the deepest recession
of the 21st century.
Consumer spending
Consumer spending has been a significant driver of the Indian
economy for some decades now. Despite the increase in digital
payments in the past year, consumer spending has witnessed a
sharp decline of 40% - that was crippling to the economy. Other
data sources showed a drop of around 31% year-on-year in the first
quarter of 2020.
With all the pent-up demand
due to the imposed restriction,
the post-lockdown could see
consumer spending in daily
essentials, beauty, and other
FMCG products – returning to
the pre-lockdown levels. Other
consumer items in areas of
personal health, home hygiene,
and physical fitness are also
expected to show strong
growth -particularly in the
urban sectors.
Gross domestic product
(GDP)
Against a Reuters forecast of an
18.3% contraction, India’s GDP
reduced by almost 24% in the
period between April to June
during the lockdown. While the
second quarter (ending in
September) showed partial
improvement, the GDP is
projected to get into positive
territory in the final quarter of
the 2020-21 financial year.
Thanks to the good
monsoons, India’s
foodgrain production has
reached over 300 million
tons in 2020, which augurs
well for the country’s
economy and GDP figures.
Add to that, the increase in
consumption demand and
the return of the
manufacturing activities are
going to be key drivers for
the GDP estimates in 2021.
Manufacturing and exports
With a share of almost 20% of the
GDP, the manufacturing sector has also
been severely hit by the economic
lockdown. Probably the industry that
has been hit the hardest is the
automobile manufacturing industry,
which comprises half of the country’s
manufacturing output. Among the
major economic indicators,
manufacturing PMI reached the highest
level in September 2020 – in the last
eight years. This spells some good
news for the future of the Indian
manufacturing industry. The 2020
Manufacturing Risk Index that
included factors such as operating
conditions, cost competitiveness, and
risks, ranks India third in the list of
global manufacturing countries.
Rural economy
The rural economy of India has been among
the selected bright spots for the economy –
even during the lockdown phase. As
compared to urban hubs like Delhi,
Mumbai, and Chennai, rural areas have not
been as severely impacted – and have
continued to show strong consumer
demand.

Besides consumer activity, the rural

economy is largely dependent on
agricultural and farm output – that have
been positive thanks to the good monsoons.
Some of the positive trends in the
agricultural sector include an increase in
planned land for Kharif cultivation and a
reduction in rural unemployment from 70%
(in May) to 40% (in July) following the
ease in lockdown restrictions.
Despite all the slump in economic activity, the COVID-19 crisis is
also a great opportunity for India to build a self-reliant economy
CONCLUSION
focused on domestic spending and exports. Favorable factors in
2020 like a good monsoon, pent-up consumer demand, and a
stable monetary policy are good news for the Indian economy
going forward.
THANK YOU