Best interest on home loan

Why Indian economy is said to be slowing down in recent years?

Best interest on home loan

Money Tez helps in finding and providing one of the Best interest on home loan. In today economy most of us are worried about the stability of our economic growth. We still have no clear cut idea of whether economic growth will boom or decline. Let us discuss further about it.

Indian Economy

India being known as one of the fastest developing economy that had an economic and geopolitical balance as China. In recent time, it is said that India’s economy has steeply gone down that is one of the lowest economic growth compared to that of the past 6 years. Thus, the investment from both the foreign investors as well as Indian investors has weakened and thus the unemployment has increased.

What’s the reason for slowdown in Indian economy?

For past few decades India’s economy had met a rapid change that helped in transforming the country and lifestyle of many.

During 2006 & 2016 – Rising incomes lifted

During this period, India’s population i.e., about 271 million people came out of poverty. It refers that almost huge population from 55% to 28% of people who were suffering from poverty has fallen down.

In this period of time electricity also has improved a lot. Survey has shown that almost 70% of the population had access to power in 2007 and over a decade it has grown to 93%. As well as the ruling central government of India has construction around 110 million toilets as a huge step to bring a clean India. It was a prime movement from the part of Prime Minister Narendra Modi with the name of Swachh Bharat. All this movement was focused for better economic growth of India but as of now, this development has gone down. By 2019, Indian economy grew by 4.5% making it the 1st time the country’s economic growth gone down below 5% since 2013.

4.5 economy growth is still much higher

Compared to that of developed countries like U.S., India’s 4.5% growth is still much higher but with higher population almost 12 million Indians are entering the work force every year. Economist advices that country needs to maintain an annual growth of at least 9% to provide a better employment opportunity to the economy.

What’s the reason for this current slowdown?

Some government official states the changes in international financial market are the reason for current slowdown in economic growth. The trade between U.S.-China is one such reason that makes investors to pull back their investment from such economy.

U.N has already warned about the chance of global recession in 2020, its clear and present danger. Comparing to India, most of the economists say that the country’s economic growth problems are self-inflicted, for instance – the shadow banking sector. At the time of 2000s, India saw increase in investment. It was encouraged by state banks lending out a load of loan for huge infrastructure development projects. But some of the companies took advantage of this loan by not repaying the loan. Thus, state banks struggled to give new loans. Thus, it gave chances for shadow banks. These are financial institutes that operates like commercial bank but don’t follow traditional banking rules.

Best interest on home loan

Eventually all new loans from this third party were spread all over the nation. The loan played an important role for most of the small start-ups and other consumers who required credit. In 2018, these shadow banks leasing and financial services, defaulted on its debts repayment. Its collapsing made a huge attention throughout the Indian economy and shook up more commercial banks. This lead to ripple effect as it made cost of living higher as some of the items became much more expensive.

India’s automobile industry

India’s automobile industry is said to be one of industry which had effected due to the huge impact in decrease in economic growth. Automobile industry of India has almost 35 million people and provides 7% of India’s GDP.

Few months ago, some industries in India faced one of the worst sales in market compared to that of 19 years. Reports also show that thousands of workers have been terminated during this period. All industries have been affected at the time, agriculture and construction was also affected but the most affected was small and medium businesses. All over the unemployment rate has increased since July 2017, and has increased up to 7.7%.

Best interest on home loan

The higher unemployment was seen. Thus, it also affected others as the consumers are buying less that means the manufacturing units have to only produce less as well as investment and job creation are also less. RBI survey found that the confidence of the consumer has been lowest in 5 years.

If India economy doesn’t improve this debt could become another issue in future. Being hoping for a better future, many households have kept on spending by taking loans and dipping into savings. A proportion of GDP has fallen from 23.6% to 17.2%. As well as, household debt has increased to 10.9% during the same time.

Critics on central government

Most of the economist says that the central government has failed to spot the risks and have not yet taken any measures to get economy moving again.

The RBI’s former governor Raghuram Rajan currently has blamed the lack of significant reforms and a decrease in investments since the financial crisis.

Critics also found that these problems never affected the Prime Minister Modi at the polls as he won recent election. The question that still arises is how he could be able to keep his promise and the increase the economic growth by 2025? Economist suggests on adopting a better vision may help. As well as, long-term investment, better skilled workers and improvements to infrastructure.

Whatever may be India’s economic growth needs to come back, and fast.

Best interest on home loan

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