In recent days, the numbers of Indian GDP for Q2 ( July, August, September 2019) are making the headline and rightfully do so. When trying to achieve $5 trillion by 2024, a 4.5% rate is not what you can expect.

for my viewers who can’t understand what GDP is, let’s talk about it

Gross domestic product is a monetary measure of the market value of all the final goods and services produced in a specific time period in the economy, inside and outside of the country, often annually.

So even the revenue of the Indian embassy in Europe will be added to the GDP of India. Still, the payment earned by United Spirit or Coca-Cola will be deducted.

 

In simple words, what is GDP?

The consumption made by the public ( Plus ) Investment made by Firms in factories and related infrastructure ( Plus ) Government expenditure ( Plus ) Net of Import and export.

OR

Total income made by all public and industrialist ( plus) Sales tax and other indirect taxes like GST ( Plus ) Depreciation ( Plus ) Net of income from foreign factors.

Now let’s talk about what is happening.

One of the significant parts of this formula is consumption has been lower over the last 4-5 years. Be in real estate or cars or anything. It affected the revenue of industrialists, making many of them postpone or stop their investment in new assets. As a result, the growth of Gross Fixed capital formation is low. Yes, giving the reduction of corporate taxes is a good move. Still, Finance minister Nirmala Sitharaman failed to understand that no industrialist wants to invest when inventory is already available. Plus, the twin balance sheet problem was worse. IBC was a good measure. No doubt about that. But who is interested in making the new investments when it takes more than 270 days (the maximum limit prescribed in The IBC law)? In all this Pollution of news, the accurate information about the Contraction of 8 Core sector growth went unnoticed.

Forget the domestic once. What about foreign investment? Not only BJP but the congress govt behave complete wrong with Vodafone. Indian business of Essar telecom, Singapore-based company bought by England-based Vodafone. The government of India wants to tax. But whom? is it even coming under the territory of the Indian income tax department? Even after the Indian supreme court government’s ruling, India changes its law retrospectively. In recent contracts with foreign governments, the government of India took the decision which helps Reliance Jio directly. Like permitting technology from South Korea, Samsung is based in South Korea. But the supplier of Vodafone Idea is different. When it was clear that the decision of an honorable supreme court would hurt telecom, and it is much advisable to cancel or go against it as this will harm BSNL also, they forgot it. ( talking about telecom in detail as nowadays telecom is taken as infrastructure)

The new investment, expected to come from ArcelorMittal in Essar Steel, took sufficient time. She was taking the toll in the form of faith of the IBC.

For investment, an industrialist needs either equity or debt. I don’t know about equity, but right now Corporate debt market is not much more profound. Banks have big NPAs, so they can’t lend. With the Telecom, MSME, and NBFCs coming as new NPAs, looking difficult for govt. To handle.

The situation was grim. The sign of it was visible 2-3 years back. There was a great opportunity while Arun Jaitley was the Finance minister. But He likes to deny it. Then came Nirmala Sitharaman. This lady loves to be Indian, so she decided to convert BUDGET into what she called BAHIKHATA. another opportunity was lost.

I hope that while being Indian, we need not forget that a Budget is a tool of Government finances, and Indian or not Indian, we need to use it.