GDP in India is considered as an important growth rate
through which the growth of the country can be accessed. It measures the total
amount of goods and services in the country. It gets calculated in three ways –
Production, Income, and Expenditure approach.
India’s Gross Domestic Product grew 7.3 percent in 2018 in
comparison to last year. The GDP per capita of India in 2018 was USD 2,009, USD
66 higher than in 2017, it was USD 1,943.
India was worth 2600.82 billion US dollars in 2017. The GDP
value of India represents 4.19 percent of the world economy. GDP in India
averaged 545.87 USD Billion from 1960 until 2017, reaching an all-time high of
2600.82 USD Billion in 2017 and a record low of 36.54 USD Billion in 1960.
The condition of the country is not very good nowadays,
the GDP rate has fallen. The 2 major causes for the same could be
Demonetization and implementation of GST. Both factors have impacted the
economic condition of the country.
Demonetization includes the forced conversion of cash into
less liquid bank deposits, which generates a decline in employment, output, and
borrowing by firms in the presence of downward wage rigidity. Households also
get forced to move to noncash forms of payment to attenuate the impact of the
cash shortage.
The immediate process of Demonetization has affected the
country’s growth in various sectors including transport, communication, real
estate, manufacturing, professional services, etc. It affected the demand by
reducing the supply of money and constrained the availability of cash as a critical input for specific economic activities.
The most impacted areas were construction and manufacturing,
the growth of the construction sector fell to 3.7 percent from 6 percent and the
manufacturing growth 8.2 from 12.7 in the time periods.
On the other hand, there was a huge impact on the agriculture
sector as well. The growth for the same went down to 5.2 percent from 6.9 percent. The impact turned out to be the massive increase in the price of seeds
and fertilizers and the farmers are getting unable to handle these additional
expenses. The real estate sector saw the money funding and transactions
completely dead. The demands for lands and properties dropped very badly. The
investment from foreign institutions decreased dramatically.
Even the digital payments schemes, promotions, discount
offers could not ease the impact on the consumer durable markets.
The GST implementation has also made a huge difference and
lead to the massive increase in the price of the basic items of a citizen, that
made the demand and supply cut down pathetically. The stock market growth is
declined by the reforms. On the other side, GST turned out to be a transparent
method that avoids various other taxes and makes the consumers to pay a single
tax, it reduces the tax burden between manufacturing and delivering services.
It sometimes makes the products expensive though.
To conclude, it can be said that the cashless limit
describes economies with well-developed financial markets and cash continues to
serve an essential role in facilitating economic activity in modern India.
Demonetization was implemented to avoid black money and corruption and it is
much effective. The problems that decline GDP rate should be resolved and make
the country economy people friendly.
Latin Manharlal Group
