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Review of the Indian economy

A sustained slowdown in major global economies weighed on the

Indian economy through the financial year 2019-20, sending the GDP growth e the huge pile of edific rate to an 11-year low of 4.2%, as against 6.1% a year ago.

Indias manufacturing growth hit a low of 0.3% from 5.7% in 2018-19, construction slipped to a low of 1.3% from 6.1% and consumer spending reached one of its lowest levels in history during the period. A host of internal factors like continuing impact of demonetisation, historically poor automobile sales, a flat growth in core sectors and a steady decline in investment into construction and infrastructure aided the drop. India saw unemployment figures reaching record highs during the year under review.

The countrys fragile fiscal ecosystem suffered a major setback owing to the widening fractures in the countrys financial bad debt in the books of banks and the continuing NBFC crisis. The economic woes translated into a 2% depreciation in the Indian rupee since

January 2019.

Strong headwinds over funding and a sustained slump in rural infra activity and small and medium enterprises

(SME) decelerated the growth of NBFCs to an estimated 10-12% in 2019-20. Although NBFCs have been suffering from a long-term financial crisis, those with long-standing track records focused on retail asset financing by mobilising funds efficiently and maintained asset quality.

The year threw up a silver lining when India became the fifth-largest world economy in 2019 with a gross domestic product

(GDP) of $2.94 trillion and moved up 14 places to 63 in the 2020 World Bank Ease of Doing Business ranking.

India was among the top 10 recipients of Foreign Direct

Investment (FDI) in 2019-20. At $49 billion, the inflow was up

16% over the previous year. The country saw an all-time high private equity investment of $48 billion in 2019, mainly on account of the infrastructure sector, which accounted for 30% of all investments by value in 2019, compared to 12% in 2018.

The outbreak of Covid-19 towards the tail end of the 2019-20 dealt a body blow Indias efforts towards economic resurgence. The governments C20-trillion relief package which included relief for poor and migrant workers, in addition to a slew of measures like direct cash transfer to farmers, increased wages under the MGNREGA and utilisation of welfare funds for construction workers did little to boost the sharply deteriorating economic condition of the country. Also, the governments efforts to unlock the economy is facing significant hurdles as the pandemic continues to spread rapidly. Experts suggest a sharp contraction in the Indian GDP growth for the current year.