The Indian economy at constant prices on March 31 2022 (147.36 lakh crore INR) was about the same as it was on March 31,2020 (145.16 lakh crore INR) which means that we are running to stand in the same place. However, the average individual citizen has become poorer because the per capita income has declined in the two years from 108,247 INR to 107,760 INR (i.e., ~4.5%). Although the Indian economy is still the fastest growing economy in the world at 7% in terms of GDP, but in terms of Gross income in INR is almost flat for the last two years (as seen above).
(Source: Indian Express dated June 5 2022)
Key Statistics indicative of the Indian economy:
- Retail inflation is at 7 to 7.8 % and wholesale inflation at 15% and above during last six months
- Unemployment rate has been above 7% in the last few months
- Rupee has depreciated to as low as 80 INR to one USD
- Retail oil price is trading between 105 INR to 115 INR per litre (Petrol) and diesel at 95 INR to 100 INR per litre in all metro cities
- Commercial vehicle sales are either flat or going down during last few months
- Fiscal deficit, trade deficit, and current account deficits all are above the standard limits/ target in terms of % of GDP
This is indicative of a larger problem. No country can become a power house if the labour force participation rate is 40 %. In developed counties this rate is at 60% or above. The bulk of India’s working age population is either not working or not looking for work due to lack of access or information.
The four pillars of a country’s economy doing well are:
- Government spending and investing more year on year on infrastructure and capacity building
- Private institutions/parties investing more in industry and capital market
- The consumers are spending more
- Growth of economy through exports
All the above except point number 1. (i.e., Government investment), are not increasing year over year. This means that the Indian economy does not really have a sound footing currently.
If one has to believe in the above data/information, it tells us that the Indian economy is not doing well as it should be. We have good diagnosis by the Government, but the medicine given may not be appropriate by the economic experts who are advising the GOI.