Updated: May 20, 2020
This Article was Posted in Facebook on 5th September 2019.
My Views and Opinions on Current Slowdown in India and Possible Revival Solutions.
Fundamental Reasons :
1. Demonetization - Small and Unorganised Business, Which runs on Cash and Its Cash Economy were Crushed during this Process.
It may generate some Black Money, Which propels Formal Economy in terms of Passenger Vehicle Purchases, Real Estate Development and Other Retail Shoping Purchases - Electronic and Household Things - These Formal Economy Purchases , will Increase Tax Collections. Now, this whole cycle is stopped.
2. Hastily Implemented GST - Business is Continuous Cycle, It should never be Derailed and Disruppted...
i ) Bringing back will take a Lot of time .GST has been implemented very poorly and taken almost 6-8 months in settling.Repercussions are coming Now.
ii ) Some Items like cars have been put under 28% Bracket, after Agriculture, Automobile has huge affect on Employment in India. Now, Ordinaty Middle Class People aiming for Passenger Vehicles, withdrawn their Ideas of buying. Loss in Business and Resulted in Slowdown, as much as 33% Degrowth for Maruti in Last Month, ie. August 19.This kind of Extreme Degrowths across Industries results in Job Losses and subsequently affects the Consumer Confidence and FMCG Sector will get Affected immediately.
3) Crucial Sectors like Mining has been given a very rough treatment and resulting in shifting of Business Activities to other countries ( Jobs have been shifted to Other Countries, agian Job Losses in India)
Classic Example - A known Company of mine is shifted mining in Africa / Middle East.
4 ) Tax Terrorism - Mindless ridings of Income Tax and Enforcement Directorate on Corporates .They are Picturising Real Heros of Economy like Businessmen ,Entrepreneurs and Business Professionals as Villians and Tax Evaders.Classic Case of Coffee Coffeeday ( CCD ) Founder Suicide, VG .Siddharth Created an employment of 30,000 and indirectly 20,000 at Mindtree..
5 ) Businessmen and Entrepreneurs Lost Interest in Risk taking and Business Apetite has gone down in them. Why they will work day and night for just to paying taxes, when their every purchase is monitored. Every Luxury Purhases are monitored and scrutinized with intention to penalise.
6 ) Modi Government does not have Proper Roadmap for Revival and Recovery of Economy. BSE lost 770 on 02.09.19.
$3 Trillion Economy cannot be run by Yoga Gurus and Swamies.It has to be run by Technocrats, likes of Manmohan Singhs and Raghuramrajans.
7) Inaffective Opposition, who failed to Contain the Rulling Party, who are taking Decisions as per their Whims and Fancies.
Dr.YV.Reddy, Former RBI Governor, argued, Growth during Coalition Parties is high compared to Party with full majority in Newyork University recently...
These are Major Reasons for Present Slowdown in India.
Possible Solutions :
1. Put Automobile sector under 18% Tax Bracket and Reduce Registration Fees by 50 % and Automobile will bounce Back and Increase in Sales will cover up Tax collections and Registration revenue losses.
2. As Former Govt Economic Advisor, Aravind Subramanyam, Proved that, Govt. Statistics of GDP are reported 2.5 % higher due to manipulations , at recently held Meet at Harvard University and State the Actual GDP Numbers and Start Revival Process with Technocrats and not with inexperience Ones
3. Restore the Autonomy of Govt.Institutions like RBI and Planning Commission / NITI Ayog etc and give the Freedom and Autonomy to Intellectuals and Field Experts to Run the Show.They will bring back whole thing in 3-6 Months time.
4. Business Environment should be brought to Upbeat Momentum with Incentives and Special Packages such as Removal of Wealth Tax and Reduction in Income Tax. And Volume will cover up Overall Revenue Collection Losses.
5. Minimise Government Interventions in Public Life and Restore Media Autonomy and Create a Competitive and Merit Based Economy.
Everything will be back to Normal Shortly .
People can Criticise and Argue on points cited above and can come to their Own Conclusions.