GDP Current Affairs - 2020

Institute for Management Development releases World Competitive Index

The Institute of Management Development recently released the World Competitive Index. India ranked 43rd in the ranking.

Highlights

In 2019, India was at the 43rd ranking. Since 1989, India had ranked 41st in the World Competitiveness Ranking. However, it slipped to 45th rank in 2017 and secured 44th in 2018. The continuous low ranking of India is mainly due to poor infrastructure and insufficient education investment.

According to the ranking, India has improved in long term employment growth, foreign currency reserves, overall productivity, education. On the other hand, India had declined in taxes, real GDP growth, competition legislation, exchange rate stability.

Other Countries

Singapore secured the top position in the ranking system. Denmark was at the second position, followed by Switzerland, Netherlands, Hong Kong.

The ranking is created by the business school based in Singapore and Switzerland.

China slipped from 14th place to 20th and US moved to 10th place. Among the BRICS countries, China topped followed by India, Russia, Brazil and south Africa.

COVID-19: Fifth Recession of India

Since Independence in 1947, India has faced four recessions. According to Reserve Bank of India (RBI), the recessions occurred in 1958, 1966, 1973 and 1980.

Highlights

Recession is defined as the fall in economic activities of the country along with decline in sales, income and employment. India has so far seen four such negative GDP growth. In 1958, the GDP growth was -1.2%, in 1966 it was -3.6%, in 1973 it was -0.32% and in 1980 the GDP growth was -5.2%.

1958: Balance of Payment Crisis

The Recession that India faced in 1957 was due to Balance of Payment problem. It was mainly due to weak monsoon that affected the agricultural production badly. India then imported 60 lakh tonnes of food grains. This widened trade deficit of the country that in turn reduced foreign reserved to half.

1966: Drought

India fought wars with China in 1962 and with Pakistan in 1965. The wars affected the economy badly and eventually led to drought. The food grain production fell by 20% in 1966 due to droughts. India relied on its foreign imports to rescue its starving population.

1973: Energy Crisis

In 1973, the world faced its first energy crisis. The OAPEC (Organisation of Arab Petroleum Exporting Countries) proclaimed an oil embargo. Embargo is an official ban on trade with a particular country. The organization aimed at countries that supported Israel. This led to increase in oil prices by about 400%. India’s oil imports increased from 414 million USD in 1972 to 900 million USD in 1973.

1980: Oil Shock

The world witnessed an oil shock for the second time in 1980. This was due to decrease in oil production due to Iranian revolution. It further increased due to the Iran-Iraq war that followed the revolution. This created Balance of Payment crisis for India.

COVID-19 crisis

The current Economic crisis faced by India is the worst of all the previous recessions. The international organizations expect India’s growth to contract by 5% to 6.8%