Due to COVID pandemic, India's total GDP contracted by 7.3% in 2020-21 for the first time after independence. Discuss the factors behind that and suggest measures to put India's growth back on track.
Answer: Gross domestic product is the final value of goods and services produced within the geographic boundaries during a specified period of time, normally a year. GDP growth rate is important indicator of economic performance of a country.
Since independence, for the first time India's GDP has contracted by 7.3% in 2020-21. Although it was due to lockdown but as per earlier estimates, GDP was also not performing well in pre-Covid times. This is due to:
- Decline in overall demand
- Fall in consumption
- Complexity with GST implementation
- Decline in overall investment
- Poor condition of banking sector due to rising NPAs
- Stagnant growth in farming sector
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