GDP crash will cost the country’s economy Rs 20 lakh crore !; This expert claims
In the first quarter from April to June 2020, gross domestic product (GDP) fell by about 24 percent. With this in mind, GDP is projected to decline sharply during the financial year 2020-21.
Speaking to media on the occasion, former Union Finance Secretary Subhash Garg said the cuts could hit the economy by Rs 20 lakh crore and lead to a sharp decline in the country’s revenue.
The country’s GDP is expected to decline by an average of 10 to 11 percent during the current financial year. It literally means that the country’s income will be lower. There are mainly three parts of the economy, which generate income in various forms.
How will the income of all sections of the country decrease?
The first is the working class, the second is the salaried class, the second is the business class and the third is the government which collects taxes. Assuming a total income of Rs 100 by combining the three departments, 60 percent of the workers go to the salaried class. At the same time, the government generates 20 to 25 percent and the industrialists 15 to 20 percent.
If the economy slows down by 10 percent, so does everyone’s earnings. According to current figures, a 10 per cent decline in the economy would cost the economy Rs 20 lakh crore. If the income is less then the expenses will also be less. Reducing consumer spending will affect all economic activities.
Even worse than last year
Electricity consumption was lower during this time last year and it is still lower this year compared to last year. GST figures have not reached normal levels. The service sector is also declining. In this regard, the economy will decline by 12 to 15 percent in the second quarter as well. Even after the situation improves in the third quarter, there could be a four to five percent decline.
How much impact does the lockdown have on the state of the economy?
The lockdown slowed the spread of the coronavirus, but further damaged the economy. It was necessary to work to increase immunity without neglecting the economy so as to prevent the spread of the virus and also to minimize the damage to the economy.
What effect did the ban have on the economy?
The economy had a large share of unorganized, informal activities. Most of the payments here were made in cash. About 25 to 30 percent of the informal economy was severely affected by demonetization, but one of the benefits was that most of the unorganized sector began to do business as an organized sector. Thus the mixed effects of note binding have been observed.
What steps should the government take to improve the economy?
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There are about 75 million micro, small, medium enterprises (MSMEs) in the country. The government should help them. Only 40-45 lakh people are benefiting from the schemes launched under Self-Reliant India. The large section left in the MSME should be helped. The second category is about 10-12 crore workers who have no job. The government should help them. To boost the economy as a whole, the government should increase capital expenditure in various basic sectors.