Real Meaning of Economy and How Factors Impact It
An economy is basically defined as a system of making, consumption, and trade of goods and services that includes a number of products and trading of those products in an area. The word Economy is derived from a Greek word that means the management of household products and many more products. Lets first know what the different sectors of an economy are and how various factors impact them differently.
The Indian economy works in three sectors:
The first sector covers raw products that include fishing, mining, and many more, and this first section is termed as Primary Sector.
In the second section, it covers the manufacturing of that particular good, and this second section is termed as the Secondary Sector.
The third section covers a different range of services and provides services to the people and companies, and this section is termed as Tertiary Sector.
Agents of Economy
The economy usually covers an area of production, distribution, and trade. The economy is a social domain that lays down stress on practices, material expressions, and basically, it describes the management of resources. Several agents are there that deal with the economy, and these agents can be individuals, organizations, businesses, or any government organization.
Is Indian Economy Prone to Impact Factors
As we discussed the economy, it is a system of making products and trading them over the Country. The same applies to the Indian economy, where products are manufactured and are supplied all over the Country. Indian economy is known or characterized as a flourishing market economy. Economic transactions occur when two parties agree to the value of a product, and that deal of that product is done in Indian Currency that is Rupee.
In earlier times, production was carried out by laborers, but with the change over time, the advanced technology came, and nowadays, production is mostly handled by automated machines, accelerators, etc. With such new and advanced technology, the Indian economy gradually grew and had become the world’s fifth-largest economy according to the nominal GDP.
But in the last few months following several crises, the Indian economy has slowed down drastically. Like every other economy, the Indian economy is also highly prone to several factors.
Main Industries of Indian Economy the Bear the Brunt
The Indian economy has a number of industries. The Indian economy is famous for a number of industries, and they play a vital role in the overall growth and sustenance of the economy. Main Industries of Indian Economy are Textiles, Chemicals, Food Processing, Handicrafts, Petrochemicals, Gems, Jewelry, Iron, Steel, Cement, Metals, Machinery, Telecommunication, Real Estate, Paper and Transportation equipment manufacturing.
Indian economy’s export partners include the United States, Japan, South Korea, China, and others, while the main import partners of India are China, European Union, South Korea, Japan, and other nations.
Major Factors of Slowing Down of Indian Economy
A number of major reasons are there that slow down the Indian economy. In the past three years, the Indian economy has reportedly shown minor growth in some sectors following several national and international factors.
Now let us discuss major factors in detail that slowed down the India Economy
1. Demonetization: In November 2016, this major factor started slowing down the Indian economy. From this year the economy started showing negative growth in several sectors and even today those sectors such as real estate has failed to pick up. The Indian economy has not yet been able to stabilize since then. Demonetization basically aimed at stripping black money and thus replaced demonetized currency with new currency. This act was basically done to eliminate fake currency, and it was done for the funds which were organized by terror groups by which they used to fund terrorism. During this economic reform, the old currency that included currency notes of denominations of 500 and 1000 were demonetized, and new currency notes of 2000 were launched.
2. Good and Services Tax: This was another major factor in the slowing down of the Indian economy. This is abbreviated as GST. This tax was introduced in India in 2017. Because of this tax, the Indian economy has also allegedly slowed down. This tax is basically a multi-staged tax because it is imposed at every step, starting from the production process. Goods and service tax is divided into tax slabs that vary from 0% to 28%. This tax is imposed on various things or products. But still, there are few things on which this tax is not imposed, and there are others on which it is applied to a specific amount. Goods and Service tax replaced many other taxes.
3. Real Estate Slowdown: One of the major factors that slow India’s Economy is real estate; this actually introduced depression in the property market. This factor has the worst impact on the Indian economy. In 2019, it was 6%. In the last few years, employment has decreased rapidly in the construction sector. In the last few years, few projects were there, and even wages were reduced, which led to the worst situation, and because of this, the economy of India had witnessed much disturbance.
4. Job Scarcity: In the last few years, there have been fewer jobs. There has been a drastic drop in the creation of new jobs. Not only this, but even wages have also been reduced to the extent that has made a livelihood of employees unsustainable. Because of cuts in jobs and wages, the Indian economy has slowed down. Even educated people are not getting jobs, and even if they get a job, they get it at a very low salary. This factor is there in India, primarily because of the lack of skilled labor. Every year it is recorded that jobs are reducing. Though every year it is said that unemployment will reduce but instead of reducing, it increased, and because of this, the Indian economy fails to recover.
5. Corona Virus: Presently, this is one of the most recent factors that has slowed down the economy of India. This virus, termed as COVID-19, was first detected in December of 2019. Because of this virus pandemic not only India is affected, even countries like America, Italy, etc. are also affected. Because of this virus economy of India has affected to the extent that every single business, the organization is affected. Stock markets have crashed to never before lows. Presently, the situation is that daily wagers are facing a lot of problems, and they do not have money to have a meal even once daily. Because of this virus, everyone is being asked to stay indoors and practice quarantine, so economic activities have to come to a strong halt.
These all are the reasons due to which the economy of India has slowed down. There could be much more social, political, geographical, or even economic reasons, which could have led to the downtrend.