by Pankaj Yadav

India has seen a economic slowdown in 2019, with the country's real estate, automobile, construction sectors and overall consumption demand facing a serious and constant decline.

The second quarter (July-September) of the current financial year (April 2019-March 2020) witnessed a drastic fall in gross domestic product (GDP) growth rate to 4.5 percent, even as international bodies like the International Monetary Fund (IMF) and the World Bank repeatedly cut Indian economy's growth rates. This was described as the lowest GDP growth rate in the previous 26 quarters, which means in over six years.

The main reasons attributed to the fall in the GDP growth rate were - contracted manufacturing activity, weakened investments, and lessened consumption demand.

In the words of former Governor of India's central bank, the Reserve Bank of India (RBI), Raghuram Rajan, there are signs of "deep malaise" in the Indian economy.

"Growth is slowing significantly and there is currently little fiscal space available to the government to spend more. Corporate and household debt is rising and there is deep distress in parts of the financial sector. Unemployment seems to be growing," he was quoted as saying by the India media.

"Repeated government allusions to the 5 trillion U.S. dollars economy by 2024, which would necessitate steady real growth of at least 8-9 percent per year starting now, seem 'increasingly unrealistic'," he added.

Rajan, the RBI Governor between 2013 and 2016 and now the Professor of Finance at the University of Chicago Booth School of Business, called for reforms to liberalise capital, land and labour markets, and spur investment as well as growth.

The much-lauded economist and thinker also called for reforms in land acquisition, labour laws, stable tax and regulatory regime, fast track bankruptcy resolution of developers in default, proper pricing of electricity, preserving competition in telecom sector and giving farmers access to inputs and finance.

The Indian government's moves during the past two-three months failed to revive the sluggish economy, even as the business sentiment remained at one of the lowest. The automotive sector faced its worst phase, and the same was experienced in the realty and manufacturing sectors.

Finance Minister Nirmala Sitharaman announced over 30 steps in various sectors to reverse the downturn, but none of them seemed to have worked, even as it is feared that the decline might soon reach the 3.5 percent-mark.

Considering the constant slowdown in the Indian economy, the International Monetary Fund (IMF) advised the Indian Government earlier this week to avoid a fiscal stimulus to boost the sagging economy and instead go for an easier monetary policy.

In a consultation report on the Indian economy, the IMF said that considering the cyclical weakness of the economy, the monetary policy should maintain an easing bias, at least until the projected recovery takes hold.

Fiscal stimulus should be avoided given fiscal space is at risk and revenue losses from the recent corporate income tax rate cut should be off-set. It, however, stuck to its overall growth projection of 6.1 percent for the country during the financial year 2019-20.

The IMF report also suggested that personal income tax collections could be increased by ending exemptions, reducing the minimum threshold for taxpayers and by raising contributions by top earners.

The country's real estate sector witnessed one of the poorest years, faced with a poor housing demand. As on date, according to rough estimates, there is an unsold inventory of around 450,000 housing units.

There has been a strong push by the central government for the affordable housing, which accounts for nearly half of the total residential housing sales.

Only a couple of days ago Vice-President of India Venkaiah Naidu expressed hope for revival of the economy in near future. He expressed confidence that the Indian economy would rebound in the near future describing the current slowdown as "cyclical".

Admitting that the Indian economy was facing "some challenges" due to the decline in growth this fiscal year, he said that the country had faced similar slumps in the past but had "bounced back with a higher growth rate every time."

Referring to the reforms, including the introduction of the revolutionary the Goods and Services Tax (GST), to usher "One Nation, One Tax, One Market," the "Insolvency and Bankruptcy Code" and the steps taken to curb black money, the vice president asserted that they were aimed at making the economy "more robust and resilient."

The government has also taken measures to tackle the problem of Non-Performing Assets and improve the health of the banking sector, he added.