First technical recession, sensex at 50k: How economy performed in 2 years of Modi 2.0 – Times of India

NEW DELHI: When Modi took oath as the Prime Minister for a second-term in May 2019, he had envisioned turning India into a $5 trillion economy by 2024.
However, right when the government was looking to boost growth further by introducing a series of economic reforms, the world was struck by the Covid-19 pandemic in February 2020.
Here’s a look at some of the things that happened in these two years:
* India’s first technical recession:
The Covid-19 pandemic adversely impacted all economic parameters. With activities across the globe coming to a standstill owing to the lockdowns, the global economy contracted by over $3.7 trillion in 2020.
India entered into a recession for the first time in history in the first half of fiscal year 2020 with two successive quarters of negative growth.
The gross domestic product (GDP) shrunk by an unprecedented 24.4 per cent in the first quarter of the financial year 2020-21. However, due to spurt in economic activities in the second quarter, the GDP decline narrowed to 7.3 per cent.
The economy exited the technical recession phase by further growing to 0.4 per cent in the third quarter.
The Centre also revised annual GDP estimates for FY21, predicting an 8 per cent contraction, deeper than an earlier estimate of -7.7 per cent.
The Economic Survey, released in February earlier this year, has projected the economy to contract 7.7 per cent in current fiscal and growth to rebound to 11 per cent next fiscal.
However, with the onset of the second and more violent wave of Covid-19 might slow this recovery process.
Ratings agency Moody’s forecasts real GDP growth to fall to 9.3 per cent from 13.7 per cent for the fiscal year ending March 2022 and to 7.9 per cent from 6.2 per cent in year 2022-23.
* Announcement of Atmanirbhar Bharat Abhiyan
In order to mitigate the economic downturn caused by the pandemic, the Centre had announced Atmanirbhar Bharat Abhiyan in three different tranches.
* Rise in unemployment levels
The sudden onslaught of the second Covid wave has once again impacted the job market. Data by Centre for Monitoring Indian Economy (CMIE) shows that jobless rate is again on the rise.
Hitting a double digit figure of 23.5 per cent, jobless levels in the country rose to historic highs in May last year when the Centre imposed nationwide lockdowns to curb the spread of the coronavirus.
However, unemployment rate had started to come down with the gradual reopening of the economy. Resumption of business activities in a phased manner led to the rise in hirings.
But localised lockdowns during the ongoing second Covid wave has started to impact the economy as well as the job market.
The all India weekly unemployment rate inched up to 14.7 per cent in the week to May 23, marginally higher than the 14.5 per cent in the previous week.
In urban India, the weekly unemployment rate was at 17.4 per cent, rising sharply from 14.7 per cent on May 16 while in rural areas it was at 13.5 per cent, lower than the previous week’s 14.3 per cent , according to CMIE data.
In fact, urban unemployment rate has been on the rise since April 2021. The 30-day moving average of urban unemployment was 7.2 per cent on April 1 and it jumped to 9.6 per cent by May 1. The figure stood at 10.77 per cent on May 24.
* Sensex breached 50,000-mark milestone
On January 22, the benchmark BSE sensex achieved a remarkable milestone by breaching the 50,000-mark for first time ever.
The Covid-induced global sell off dragged sensex to record low in late March 2020. But, it staged a strong recovery from the lows. Both the BSE and NSE indices finally wrapped up 2020 on a bullish note, with sensex gaining nearly 16 per cent.
Interestingly, the sensex has nearly doubled since PM Modi came to power in 2014.
It had breached the psychological 40,000-mark during the repeat win of the BJP government in May 2019.
* M-cap of BSE listed companies at $3 trillion
The market capitalisation (m-cap) of all BSE listed companies touched $3 trillion-mark from just $125 trillion in less than two decades.
Notwithstanding pandemic woes, the m-cap shot up to $2.5 trillion on December 16 last year. The valuation touched $3 trillion on May 24 in just 159 days.
The data was shared by BSE CEO Ashishkumar Chauhan on Twitter.
“Market capitalization of equities of listed companies on @bseindia reached $3 trillion intra day for the first time ever. A great milestone on a long journey,” Chauhan tweeted in the morning.
“Congratulations to all 6.9 crore+ registered investors, 1400+ brokers, 69,000+ MF distributors and 4700 + companies,” he said.
* Corporate tax reduction
In the biggest reduction in 28 years, the government in September 2019 slashed the base corporation tax rate to 22 per cent from 30 per cent earlier. The move was aimed at making India a globally competitive and favoured destination for investment.
For new manufacturing firms, incorporated after October 1, 2019 and starting operations before March 31, 2023, the base corporate tax was reduced from 25 per cent to 15 per cent.
* PSU bank merger
On August 30, 2019, finance minister Nirmala Sitharaman unveiled a mega merger plan for public sector banks (PSBs), amalgamating ten banks into four.
The decision was aimed at making banks stronger and giving a fillip to the banking and financial sector in the country.

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