The coronavirus pandemic affected almost everyone on this planet. Every country suffered a major financial crunch because of the global lockdowns that had to be implemented to stop the spread of the disease. However, countries like China have bounced back to their pre-COVID economic conditions, and the US, Japan, and some other European countries are also re-gaining their growth.
However, India, which used to be one of the fastest-growing economies in the world a few years ago has seen a far worse fate. India is a country with more than 1.3 billion population. Now imagine, due to the hast lockdowns that the government had to impose because of the pandemic, more than 140 million people lost their jobs. Thousands of people faced a drastic salary deduction. After the lockdown eased, many people went back to their jobs, but till now, more than 6 million people are still jobless as there are no new openings.
A survey conducted in June indicated that around one-third of small and medium-sized businesses that form a major part of India’s stable and local economy went beyond saving due to the pandemic. This means that a very solid portion of the economy got badly shaken because of the devastation the pandemic brought on all those small and medium-sized companies. These businesses are a source of local wealth and even local employment.
As per an economic estimate, in the third quarter of 2020, India’s economy has contracted by 7.5% which is definitely a major shock. But the government has pledged around $50 billion to support the SMBs to come out of this critical time and get back on their feet. This pledged budget is around 2% of India’s annual output, however, it is not sufficient for the vast population that the country has.
India Tries to Get In The Boots of China
When India’s economic growth was spiraling upwards a few years ago, countries like America had started hoping that India would soon take the place of China. Multinational companies had started seeing India as China’s substitute. One reason for this animosity towards China was increasing political tensions and trade war between America and China. Also, China’s costs were increasing, and their Communist Party intrudes into business matters, which complicates things with other countries. Another reason was that the Chinese local manufacturers had improved their quality to give tough competition to international brands. So, all these factors were enough to sway global businesses towards India, and since it was showing a lot of promising growth, things were going pretty well. However, since 2019, India’s economic growth also started seeing a stagnancy which was partly due to several of PM Modi’s infamous decisions and actions.
PM Modi’s New Policies to Increase Government Revenue Backfires
Some of his policies were really good for the local businesses, however, some of his initiatives proved to be devastating for SMBs which lack the resources that bigger businesses have and could benefit from.
Banning large currency notes in an effort to give a boost to digital payment systems and to prevent people from avoiding taxes and money laundering also did not sit well with SMBs. Another policy that replaced India’s national and state taxes with a single VAT to curb corruption also had a negative impact on local businesses. PM Modi brought changes in the industrial policies also, turning them inwards, and that also caused a lot of harm to the economic growth of the country. His policies are specifically quite tight for local businesses that can compete with global companies like Amazon and Walmart.
So, all in all, it seems that PM Modi’s policies backfired, and the declining economy of India is because of measures that its government brought on itself. And the decline was already there, but the pandemic further exaggerated it. And now, the country faces a historic recession!
I’m Ava Paul, an experienced news website author with a special focus on the entertainment section. Over the past five years, I have worked in various positions of media and communication at World Stock Market. My experience has given me extensive knowledge in writing, editing, researching and reporting on stories related to the entertainment industry.
