Writing this one 2 days late as I was down with fever. As I am recovering I was kind of trying to understand the worst that Indian economy has faced in the recent past. Not so long ago in the year 2012-13, India faced an economic downturn even when the Globe wasn’t equally bad as the Indian economy. Any economically sound person would know that 2008 was the worst ever financial crisis in this 21st century.
Right after the crisis, many countries came back stronger and so did India. As the countries around the globe continued to move up in the growth cycle, suddenly India economy had taken a backstep.
2012-13 was the year when India was in a worse situation than what India is facing right now. Before I do make any more comments on the economy let’s just compare the 6 leading indicators of Indian economy for 2012-13-14 and 2018-19.
1. Currency depreciation: In the year 2012-13 our ₹ was trading at 50.5. Which jumped to 56.5 and took another big leap to 69.8 in the year 2013-14. This is a 19% depreciation in just 2-years. Cut it forward to present year, ₹ moved from 65 to 74 Which is a 13% depreciation, to recover back to 70-71 levels. In the issue of currency, we are in a better position.
2. GDP Growth: Much talked about issue is the GDP Growth. In 2012-13, 5.5% was the annual growth rate, with 4.3% as the lowest. Next year we improved to 6.4% and the lowest was 5.3%. Right now, for the year 2018-19, the annual growth rate is 6.9%, the lowest coming at 5.8% lowest. Is India in the worst condition? Here am comparing annual GDP rate, not just one quarter.
3. Inflation rate: Inflation for a country like India is a crucial indicator. Half of our system works on the basis of Inflation. For the year 2012-13, India’s inflation stood at 10.2% and in the next year, the inflation marginally fell to 9.9%. Whereas in the present year for 2018-19, Inflation annually is at 3.4% with 4.9% being highest and 1.9% being the lowest. To tell you in simple words, in the years 2012,13 and 14 our money lost its worth by 10% and today our money worth is lost just by 3.4%. So in a sense, we are 6.6% richer. The economy is in worse situation!?
4. Real interest rates: A connected indicator of inflation is the interest rate. RBI in India decides the interest rate based on the inflation rate. RBI manages to make sure the depositors get some worth for their money saved in the banks. Thus in 2012-13, even after maximum stretch by RBI, the real interest rate was at (-2.3%). Hello, you were losing the money value if you had put them in the bank. Come today, thanks to inflation control by Govt, people enjoy the real interest of +2.9%. Oh, come on…. Is the economy still in worse condition!
5. Trade deficit: India is a trade deficit country, where our imports are more than our exports. But how wider is the deficit is a challenge. In 2012-13 the deficit was at $15.7 billion which fell to $11.3 billion in next year. Whereas in the present year, the trade deficit stands at $14.8 billion. One shaky indicator which India needs to work on. But don’t forget the global trade wars and the slowdown in Asian and European markets.
6. FDI: Finally here is the answer for all those who blame India’s foreign policy and Modi’s Foreign travels. India has the FDI inflows in the year 2012-13 was $19.4 billion dollars which have risen to $21.2 billion dollars for the year 2013-14. But there has been a sudden spike in the FDI as Modi took charge. His diplomatic relations with all the countries has brought high dividends to India. Our FDI inflows now stand at $33.4 billion dollars, which is almost a 60% jump.
These are the six such indicators which prove India’s state of the economy. As a citizen, it is always important for us to do minimum research and then make our points. Do not jump the gun and blame the Govt for the slowdown. It’s a global slowdown and it’ll reverse in no time.
We must not forget the past and not make the present look big in nature. It’s a human tendency and mostly that of fools. Who doesn’t have any patience to read, rather pick up something random and make a mockery of situations with no clear knowledge or understanding of realities.
Be a wise man, research on the subject and become the right example!