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India: State of the economy!


Well-known member
Lets cut through the maze and understand the correct state of our economy.

1.Demonetization destroyed the informal sector so badly, millions of small businesses have closed shop.

2. Economics 101 - when ever you impede or stop the flow of “People” or “Goods” or “Money”, the economy will collapse. Demo stopped all the 3 things - People stopped working & stood in queues. All transportation stopped as the truckers could NOT use the old notes & hence abandoned the trucks to stand in queue. Notes - 1000 & 500 were close to 86% of the economy, so all business transactions stopped during this time.
Business not only stopped for the 2 months of Demo, but the sentiment took a hit. People simply stopped spending after that for months/year. Real Estate, Textiles, Consumer Goods, Auto sales etc. all took a deep hit. Most of the small informal businesses had to close down.

3. Farm Crisis - Never in the history of this country, have the farmers seen this level of distress. yes, they struggled during congress regime as well, but now it is a total crisis. Demo has totally destroyed the farm sector.

4. GST - Total mess - GST idea itself is wrong for a country like India. you cannot expect small uneducated traders to learn English, IT systems & start filing tax returns on the website or mobile app. They cannot afford to go to Tax accountants & get this done. scores of businesses are struggling & instead of focusing on the business, they are wasting time doing this IT filing stuff. when VAT was working so well, what was the need to implement GST ??

4. Employment - 2 Crore Jobs - Total failure - forget 2 Crore jobs, millions & millions have lost jobs. Real estate sector which employed the highest #, has totally come to halt. Similarly other sectors like Textiles, Hotel Industry, most consumer goods etc.., have all taken a huge hit. Even today, footfall in Hotels are still much lower compared to pre-demo era.

5. Treasury - is empty !! - PSUs are under distress & SBI posted loss of over 7000 CR the first time in its history - so these PSU’s used to pay dividend to the Centre earlier !! Tax Collections Collections are down for both direct & indirect taxes. when one reports that GST collection is 1 lakh crore, please remember, 40,000 CR or more will have to be paid back as input credit. so net collections will be only 60,000 CR.
In short the Govt has “NO money” !!. thats why they came up with the crazy idea that all bank deposits will be taken away & shares will be given to depositors. I mean, if you are flush with money, why will anyone come up with the idea.???,

6. Petrol & Diesel - Gosh never has the prices come to this level, even when Crude prices were $100 per Barrel in the past. why do you think the Govt is unable to reduce the prices despite public outcry??, because the treasury is empty !!! Infact they need more & more money to fund the loss making PSU’s & Banks & enormous bureacracy salaries.
Bank FDs - why do you think the Bank FD rates came down, there is NO money !!! Businesses are running under loss & they are NOT paying any loan to the Banks. So Banks are under severe loss now with SBI posting the first loss in history !!

7. Bankruptcy Law- Big Mess - Sometimes Businesses default for 2 payments the loan & then later they pay back. This is part of normal running of businesses where cash flow sometimes are inconsistent. Due to this law, if any one defaults for 2 times, then the company will automatically be taken over by the Banks. what will the Banks do with all the material say clothes?? so a good profitable business goes out of business due to this disastrous law !

Now you know why the govt is asking LIC to buy out debt ridden IDBI bank as it's coffers are empty !!!!

In short, the economy is in a total mess !!

As i mentioned in another thread, bjp does not understand governance. They put off the Delhi bureacrazy so badly they enmasse voted against 67-3.

Clearly the bureacrazy (deep state) set this govt for failure by pushing the disastrous demonerisation, gst, IT raids on businesses, and bankruptcy laws. It has created a deep sense of fear among entrepreneurs and stifled growth.

And I predicted this when demo mess started and some may remember my earlier post.

What a mess...a massive mandate was not only wasted but we have taken the nation backwards by many decades!!


Well-known member
How did demo destroy the economy? Lot of folks are not clear. So let me explain.

Let's say i start a textile mfg company with 100 cr bank loan with qtrly payment back to bank.

On the demonerisation date, I had shipped over 10 Cr material to distributors on credit terms of 60 days. Distributors sent them to various shops in the city.

Demo stuck like lightening... no one purchased these 10 cr material for nearly 1 yr. 2 months was lost in the drama of standing in the queue. Post that the sentiment was so bad, nobody bought any non essential items like clothes real estate etc..

So now I defaulted on the bank loan leading to increased NPA. Also i closed down the factory to stem the loss leading to 1000s of jobs being lost. So like this across all sectors businesses began to default on the loans leading to massive NPA crisis.

Instead of generating 2 cr jobs per year we have lost millions and millions of jobs.

So we are very close to a major govt debt default like we had in 1991.


Well-known member
My take - given the dire situation, bjp will most likely not even want to win the lok sabha elections. They will not even try to win! I mean if we have a mountain to lift, all of us will just run away from the battle field. LoL.

So it is up to our kichidi coalition and our good old Chidambaram to fix the economy. But it may be even too big for him as well, though he is the best bet we have now given that we don't have a stalwart like Narasimha Rao.

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