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5 reasons why it seems that the Indian economy is begging to grow again

Srishti P
·3-min read

There have been growing concerns over the GDP growth figures slowing down by 4.2% in the Indian economy for the 2020-21 financial year. However, the world’s economic growth had stagnated quite considerably ever since the start of 2020, when the COVID-19 pandemic started to ravage the world as a whole. This stagnation in growth has impacted the lives of millions of people in India and the world in ways that weren’t even imaginable before.

Union Budget 2021 | Yahoo India

In India, the three main sectors of the economy, i.e., agriculture, manufacturing, and tertiary, are expected to contract around minus 3% to minus 9% as per many estimations for this financial year. With that being said, five reasons why it seems that the Indian economy is begging to grow again at higher levels are as under:

Increased unemployment

For any country to have a bright future, their young population, in particular, must have decent jobs in their hands. Recently, India’s unemployment rate has risen because many private companies have closed down due to the impact of the COVID-19 pandemic. That’s why the government needs to bring in policies in the Indian economy that can help the youth get jobs for leading a sustainable life.

Also read: Will the Indian stock market rise or fall after the Budget?

Reduced higher capital investments

Economic growth for India is of massive importance because it encourages organisations to invest higher amounts of capital in meeting demand and supply balance. With that, as the capital investments are directly proportional to the country’s economic growth, especially in this uncertain time, it has become tough to have the same inflow of higher capital investments in the economy.

Increased government borrowings

It’s never wise for any government to borrow higher levels of money from the market or international institutions. To face challenging situations, the Indian government felt the need to borrow more from other financial institutions.

However, it is best to reduce its borrowings by implementing more revenue policies and ensuring less spending on benefit schemes. It also helps in reducing the debt to GDP ratios of the government in the long term.

As many of India’s organisations performed cost-cutting measures due to the COVID-19 pandemic, people’s average income has lowered. It has led to feelings of distrust and anxiety among the employees towards their employers.

That is to say; the Indian economy needs to navigate through this challenging period quicker to increase the average income of the people to afford a better standard of living.

Also read: FM must make the Budget easy for the common man to understand

Increased poverty levels

With the sustained economic growth in India, poverty levels have come down drastically over the years. However, the pandemic pushed the nation back to where it all started. The government must carve out a path in these difficult times to grow the Indian economy at higher levels to enhance people’s lifestyle.


The quarterly trends for Q1 FY2020 have shown the vilest trajectory compared to Q1 FY1920. The sluggish market trends have pulled India down in the list of world’s largest economies.

Quick read: Hits, misses of India's Budgets from 2010 to 2020