India’s GDP at -23.9 % shows that it is in the roots recession which will continue longer than expected.
To overcome this recession, government needs to increase money supply in the market as a short term goals. Putting cash in hands of people for spending and infrastructure spending – will sustain employment levels.
It was expected that India would fall into a great recession because in the months of lockdown everything came to a halt, complete halt. And we have shutdown more than we needed.
Government should spend more in infrastructural development which will simultaneously increase the employment level and increase the flow of money supply in the market as a result demand and supply will gets stabilizes. Yet it will take longer to show up in economic activity but all of that is valuable investment in the long run. It should use this crisis as a way to build the infrastructural deficit we have in the country.
Industry is asking for GST rate cuts to revive the demand. But according to me, GST rate cuts are not a good way to stimulate demand rather if this amount is used in some other activity at some different places, maybe it can improve demand.
Apromt action is needed in short term if India wants to get back to its previous years GDP level or else worse has to come.