Why Economic Slowdown In India.
                     Why economic 
slowdown in India?
Introduction
• India’s Economic growth has slowed for 5 consecutive quarters beginning from late 2015-16 
onwards. Now growth is slower than it was in the quarter in which The Modi Government 
assumed office. 
• It could be serious blow for a government that had promised to turn around the economy 
through decisive governance.
Source: www.mbauniverse.com
Lowest economic growth rate
• India’s GDP growth has gone down from a high of 9.2% in third Quarter of the year 2016 to 5.7% 
in current 4thquarter of 2017. The economic growth rate is probably the slowest in last many 
years. However, Indian Economy as per global standard is not in recessionary stage. 
Source: www.mbauniverse.com
Economy in recession
• The UK and the European Union consider an economy in recession only when real GDP growth 
actually turns negative over two consecutive quarters and by this criterion, with a positive 
growth rate of 5.7%, Indian economy is far off from being in a recession.
Source: www.mbauniverse.com
CAUSES OF ECONOMIC SLOW 
DOWN
Covid-19 Pandemic
• India is under constant lockdown since March 22, 2020 on account of Corona Virus pandemic. All 
the economic activities have come to a stand still, industries are shut and despite the 
announcement of Rs.20 lakh crore relief package to various sectors by the Prime Minister of 
India, Shri Narendra Modi, the economic sentiments have not shown any positive impact.
Source: www.mbauniverse.com
Rising Pool of Unemployed Youth 
• There is not only a pool of unemployed persons in India to absorb but the country also needs to 
provide employment to youth continuously entering the labour force. 
• The slowing of the economy is a source of concern as an economy that has been slowing for five 
quarters is unlikely to turn around quickly. Besides, it may not be able to revive on its own. 
Source: www.mbauniverse.com
No demand - No Investment
• Since it is capital formation, or investment, that drives growth in the economy, investment is an 
immediate source of demand as firms that invest buy goods and services to do so. It also 
expands the economy’s capacity to produce.
Source: www.mbauniverse.com
Reforms: Are they leading to slowdown?
• Structural reforms are being taken by almost all the governments or they have been claiming to 
be doing for more or less a quarter of a century now. Since 2014, in particular, “the ease of 
doing business” has received great attention from this government. 
Source: www.mbauniverse.com
Is it temporary phenomenon?
• A few of the experts see it as a temporary or technical issue and think that its effects would soon 
fade out while others view this as a more serious crisis created by a barrage of supply-side 
shocks to the economy.
Source: www.mbauniverse.com
Corporate sector & Industry criticize the 
Government
• Although, a concrete plan to address the problem is being developed in consultation with Prime 
Minister Narendra Modi. 
• However, a section of the industry and many economists have criticized the government for not 
being prudent enough to read the distress signs and for treating the slowdown as temporary and 
transient.
Source: www.mbauniverse.com