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Growth vs Slowdown


The health of the Indian economy is measured on several key parameters like Gross Domestic Product (GDP) growth, inflation rate, tax-to-GDP ratio, repo rate, and more. All these and several other parameters show how the economy is performing. While some parameters show the overall health of the economy, others inform us of the situation at the grassroots level.

Inflation, for example, gives a picture of how articles are priced at any given time. The inflation rate in the past one year has hovered in the range of 2.50 per cent to 4 per cent. This shows that the prices of the articles have not gone up significantly in the past year.

Repo rate, controlled by the Reserve Bank of India, impacts borrowers, particularly home buyers, almost every time there is a change. For six months, or three bi-monthly policy meets, the RBI has not tinkered with the policy rate.

Such pointers to the health of the economy are also important for the central government to consider when it prepares its annual Budgets. As Modi 2.0 — the Narendra Modi-led Bharatiya Janata Party (BJP) government in its second term — presents its first Budget on July 5, not only will it have considered the key economic metrics for the four preceding quarters but will also set the tone for the economy in the years to come.

Here, we compare the Indian economy in the lead up to Budget 2019-20 with that at the time of the NDA government’s first Budget in its first term on a set of important economic metrics.