Decoding Indian economic slowdown: Slow consumption, falling income, low wages

WION Web Team New Delhi, Delhi, India Dec 24, 2019, 10.05 PM(IST)

File Photo: Labourers work at a construction site of a metro rail station in Kolkata, India July 2, 2018 Photograph:( Reuters )

Story highlights

India remains a low-middle income country. The average income of an Indian is a little over 10,000 rupees. That's far less than most of the developed powers in the world.

The Indian economy faces multiple challenges. From slow consumption to falling incomes and low wages.

Less than six months ago — the International Monetary Fund had predicted that the Indian economy will grow by 6.1 per cent this year.
But — it's not the first time that the economists have got their prediction wrong.

In November — India's GDP growth rate fell to less than five per cent. India's growth rate has been slipping for five quarters now.

The economic data has some clues — that explain the slowdown in India.

The biggest problem seems to be the demand. Key sectors are reporting a drop in their sales.

In September — the auto sales saw their worst ever fall in 21 years.

There was some recovery in November — but there was an overall drop in domestic sales.

India's top consumer goods companies reported a drop in sales all through this year.

The real estate sector remains in a state of a slump.

The IMF has listed weak income growth as one of the reasons behind the slowdown.

India remains a low-middle income country. The average income of an Indian is a little over 10,000 rupees. That's far less than most of the developed powers in the world.

Job creation has also taken a hit

Last year — a government report said that India's unemployment rate was at a 45 year high.

Another assessment claims that India has lost nine million jobs in six years till 2018.

Access to easy credit has also dried up. This was triggered by the collapse of Infrastructure Leasing & Financial Services Limited (IL&FS). The sudden fall of this institution led to a chain reaction.

Access to cheap credit dried up. It had an impact on the operations of several businessmen.

India's state-run banks to have been struggling with non-performing assets.

The slowdown poses a significant challenge to the Modi government. 

Even the global economy is in a crisis mode. The world economy is slowing down — and this could exacerbate the crisis in India.