Presently India is experiencing a reduced growth rate(5% stated by the government)and the unemployment rate (around 7%)at its all-time high which can lead to prolonged recession if not taken serious measures by the government. The government of India has adopted CONTER CYCLICAL FISCAL POLICY to revive the economy. These policies will help to moderate the business cycle by stimulating the economy with tax cuts and new spending during recession (whereas tighter policies during boom).

The signs of recession where visible in the 2nd quarter of 2019 when around 300 foreign companies decided to stop investments in India just after the budget was introduced. From then the government started taking several fiscal policy measures to stop the economic slowdown and to generate employment.

1.Reduced export tax in order to increase production
2.GOI encouraged private investments by reducing corporate tax
3.In the budget of 2020, new slabs were introduced in income tax
4.Ended restrictions imposed on MRTP(Monopolies and Restrictve Trade Practices )Act to facilitate foreign investments
5.Government started selling out the unprofitable and inefficient Public Sector Undertakings and diverted the funds towards schemes that generates income directly to the people like MGNREGA.
6.The RBI in its part helped the government by reducing Reporate to 110 base points to encourage exports.
7.Incentives were provided for automobile and housing sector which are more employment generating sectors

Former RBI governor Raghuram Rajan has termed this situation asĀ  “Growth Recession “where the economic slowdown occurs for a few quarters that doesn’t turn negative.

The government though taken several measures to upsurge the economy, many policies were not much effective. The government has to do more like introducing more investment friendly policies,setting lending targets for public sector banks,completion of sale of Air India,making China’s disadvantage into India’s advantage by attracting it’s investments and many more for the revival of animal spirits in investors and is necessary for the economy to progress and to get out of economic slowdown.