DMPQ: What are the key reasons behind the economic slowdown in India?

India has been facing serious issues as far as economy is concerned. The growth rate plummeted   to 4.5%. Unemployment rate is highest in 45 years and at the same time food inflation is also on higher side. So we are going towards stagflation. The major reasons for economic slow down are as follows:

1. Twin balance sheet problem of both banks and business.
2. Under capacity utilisation of the corporate sector
3. Hangover of the 2009 global financial crisis.
4. Late recognition of NPA problem. It was a problem in 2011 itself.
5. Current issue of NBFC’s insolvency and them being in debt crisis.
6. Long term structural issues: like monetary policy transmission issues, stagnant manufacturing sector, poor performance of agricultural sector etc.
7. Informal and unorganised sector badly hit by demonetisation.

 

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