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India Economic Collapse
India is Slowing Down Very Fast.
Few Important Indicators
- India's Economy Contracted 9% During Corona Pandemic.
- India has 240 million Hungry
- India has 700 million Poor.
- India's Unemployment rate is highest in 40 Years - 12% Urban and 9% Rural.
- India is Behind Bangladesh in Per Capita Income Bangladesh 2227 USD and India 1975 USD.
- India is Behind Bangladesh in Savings
If we look at these last 8 years, India's Economy suffered
- Mismanagement of Corona
These three Incidents made India's Economic Collapse.
Companies Leaving India
Why Companies Leaving India
These are the few companies which Quit India. All of them booked heavy losses.
The real Question is "Why Are These Globally Successful Companies Leaving India'
The answer is very simple and easy, "Shrinking Market Opportunity." India's shrinking middle class is only reason for companies leaving India.
In last eight years, India's Middle Class and Lower Middle Class is continuously shrinking. From huge 350 million people, today it is less than half, without much savings and purchasing power. India has become worlds lower Income country and this is the reason. The demographic dividend India is always talking about lost on the way. This generation will remain, unemployed and poor all the life.
Where is Revival ?
The Present governments priorities does not look promising for revival. The revival can only come when demand grows. The demand is driven by excess cash in the hands of common man, if there is not enough savings, demands can not be created.
The present government has not focused on creating demand, providing money in the hands of common people is what missing.
I do not see in revival of demand in near future.
India will struggle for growth and employment. Millions who lost jobs in last 8 years will not be able to get fully employed.
The employment opportunities are not created, this is the reason, India lost its way to growth.
Mismanagement of Economy
What Killed India's Economy
This first major disaster. The government sucked all the cash from system. The stated goal to cleanup the system. Unfortunately not a single goal is achieved. The shock is too big for the system. The Mid-Night Drama of this government destroyed Dreams of millions of common people.
The demonetization destroyed MSME sector and cash driven Economy. 85% of Employment is in unorganized sector in India. This sector come to stand still and never able to come back. Millions of jobs are lost and thousands of MSME suffered and closed.
GST Implementation :- The half baked implementation of GST has created another disaster for economy. The GST has created huge problem for Small Business and Entrepreneurs. It has killed informal economy, unorganized sector is destroyed. This destroyed economy as whole. The unorganized sector, which is back bone of employment is destroyed. Many jobs are destroyed permanently.
Mismanagement During Corona :- Sudden declared Locked Down has seen millions of Poor Migrant Labor walking barefoot, hungry, thirsty on roads. They left Metropolis , Urban Centers for their villages. When they can not find any mode of transportation, they started barefoot walking.
They Left Dreams of Better Life back to their poor villages. They left never to come back.
India's only 8% Labor Force is covered under Labor Laws and Protected. Unfortunately these poor labor are not protected, they are only exploited, to construct Dreams of Rich and Privileged.
Poverty in India
Where Are Jobs Gone
We can divide Jobs into three Categories
- Organized Sector
- Unorganized Sector
Organized Sector is responsible for 8% -12% and Unorganized Sector Generates maximum jobs of more than 80%.
- Public Sector
- Private Sector - Industry /Manufacturing /Services
- MSME - Small and Micro Industry
Organized Sector has least effect of Demonetization and GST but slowing down of economy has destroyed the jobs.
Slowing down of economy has not created new jobs. This is one of the key reasons why unemployment rate is very high. The slowing down really destroyed the employment generation.
The slowing down has another effect, many jobs in organized sectors are lost. This is how it has multiplier effect on destroying jobs.
The real effect of Demonetization and GST implementation was on MSME, they suffered a lot. Many thousand such units closed down permanently. Losing millions of jobs. The cash driven economy came to standstill in Demonetization which killed the sector. It remained stalled for months, and millions of jobs were lost.
GST came and who ever is still able to survive Demonetization were destroyed by GST, the difficult system and its documentation has made it very difficult for small business to survive. They lost losing millions of jobs. This is how Economy was destroyed.
Corona Mismanagement of Economy
Sudden declaration of Lock-down without taking into consideration its effect and human cost destroyed economy. India contracted more than 9% YoY. Highest contraction in world. The government failed to take Proactive steps to provide enough support to the MSME and it has resulted in losing more than 100 million jobs.
The Sectors Most Effected and Lost Maximum Jobs
- MSME is Biggest Loser of Jobs
- Real Estate/Construction the second biggest effect on job losses.
- Financial Sector
These are the sector which lost more than 100 million Jobs, and increasing Hunger and Poverty.
240 million Hungry
700 million Poor
This is Present India and Government Must act on Bottom of Pyramid.
Food Prices in Hungry Country
It is always said India is Food Sustainable, self reliant. This is myth spoken again and again.
If we look at Food Consumption.
240 million Hungry People, means if enough food grains are distributed, then there is no surplus remains and India becomes a deficit country.
India is net importer of Edible Oil.
India is net Importer of Pulses.
India is importer of many other basic food items.
The reason for high Food Prices is increased input cost. Fertilizers, to Diesel to other inputs, it has put India on high fire.
India is world's biggest importer of Crude Oil, as percentage of consumption. This single Factor is more than enough to destroy India's Current Account Balance.
India has not given enough importance to building self reliance in
- Oil - Crude
- Edible Oil - It is known for long time but not much is done.
- India is no more self reliant in manufacturing- rather its MSME Manufacturing sector is destroyed over last 8 years.
- Because MSME is destroyed -India is no more export oriented economy. The directionless government destroyed India's Manufacturing and Self Reliance.
- Indian Economy is no more in position to absorb any more shocks.
It is difficult Balance of Payments Position. The RBI is not talking about how much Dollars it has and what is the long term plan to sustain it.
Mismanagement Destroyed India's Economy
Crash Is Coming
What Will Make India Crash
- Balance of Payment
- Global Market Crash
- NPA of Banks
India's net import in rising,slowing global economy, reduced Exports and withdrawal of Global Money, will bring disaster for India.
India's Current Account Position is worsening, RBI is not releasing Real Numbers of Dollars it has. With more than 2 lakh crore withdrawn by FII from Market, and increasing Import has put huge Pressure on India's Current Account.
Global Market is ready for correction. The War has put extra pressure on the market. The Crash or Recession can bring complete crash in India.
NPA - RBI's decision to relax disclose norms and NPA calculations for Banks, NBFC, Housing Finance Companies, has made it difficult to calculate or know, how much is NPA.
The NPA is huge, this poison is responsible reduced lending by bank. NPA will increase with slowing economy and can bring crash.
India has not given enough importance to straightening its rural economy, this is core reason for weakness in Indian Economy.
- Poverty and Hunger in India
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