WHAT DOES A GDP NUMBER TELL US ABOUT THE FUTURE OF ECONOMY

This article is written by RITIKA SRIVASTAVA of THE ICFAI UNIVERSITY, DEHRADUN 

INTRODUCTION

The term GDP stands for “Gross Domestic Product”. It is the market or absolute monetary value of all the finished goods and services manufactured within a country in a limited time period. Generally GDP is calculated on an annual basis but occasionally it is also calculated on a quarterly basis and as a measure of overall domestic production, it works as a comprehensive snapshot of a country’s economic health. The calculation of GDP encloses all the government outlays, investments, private and public consumption, paid-in construction costs, foreign balance of trade and additions to private inventories. The rate of GDP of a country increases when the absolute value of goods and services that the nation’s producers sell to other foreign countries exceeds the absolute value of foreign goods and services that nation’s consumers buy and this situation is known as Trade Surplus and vice versa. Further, it is divided into five categories: a) Nominal GDP, b) Real GDP, C) GDP per capita, d) GDP Growth Rate and e) GDP purchasing Power Parity (PPP).

ROLE OF GDP IN ECONOMIC BUILDING AND BUDGET

GDP indicates the economy’s health and size. It measures the absolute market value (gross) of a nation’s goods and services manufactured within a specific time. GDP tells us about the economy’s whether expanding or contracting by manufacturing more goods and services or because of less output respectively. The growth of the economy is observed very closely and always reported in percentage. It is totally based on “Real GDP” which is adjusted in order to remove the effects of expansion. It actually lets us know above how a country is functioning and its relationship to other economies all around the world. The economic growth increases with the increase in GDP. As earlier mentioned, GDP is the absolute market value of nation’s production of all the good and services and the most relevant word herein is “Value.” Value can affect in two ways:

Critics of economic growth inclined to focus on: on increase in production quality.

To increase the quality of produced goods and services.

GDP also measures the services with the increase in health care, education and other services. In a real sense, some of the economic growth is for the betterment of the environment and decreasing our dependence on natural resources. It consists of increasing public transportation, maintaining the energy efficiency of homes and business, manufacturing fuel-efficient vehicles, cleaning the waste of industries and so on.

When the government’s spending increases with a certain amount, tax with the identical amount and with the increase in both the GDP will also increase by that amount.

WHAT CAUSES GDP TO INCREASE OR DECREASE?

There are many factors responsible for increase and decrease in the rate of GDP. These factors consist of wages, infrastructure investment, weather or political instability, interest rate, asset prices and so on and these factors have been categorized as demand-side factors or supply-side factors.

Demand-side factors include interest rate which affects the spending power of consumers. Higher interest rates can cut down the expenditure of families whereas lower interest rate decreases the monthly mortgage rate which leads to more spending of money. Wages affect GDP when it is low. The reason behind that is the money of the people cannot stretch far because of high inflation periods, they are forced to cut down on purchases.

Supply-side factors, infrastructure development can affect how companies supply its goods and services. Weather, political instability and price of commodities also affect the growth and contraction of the economy. In cold weather, people tend to shop less and save more. A rise in the commodities price can affect the spending of consumers looking to cut back.

WHY IS INDIA’S GDP FALLING?

In the year 2019-2020, the Central Statics Office (CSO) revealed that India’s GDP in the first quarter of the current fiscal seems too declined to six year low at 5%. There are certain reason behind the decline in the Indian GDP:

Wrong Process in the GST implementation.

Decline in Investment.

Poor condition of banking sector.

Sharp fall in consumption.

Sharp decline in overall demand.

Agricultural crisis.

FUTURE OF INDIAN ECONOMY

Indian is facing the second wave of COVID due to which the GDP rate of the country is much affected. In the year 2020-2021, the central notified the GDP for the annual year, which is contracted by 7.3%, compared to growth of 4% recorded in fiscal year 2019-2020.

In such a pathetic situation, India announced such a contraction for the first time in at least four decades. Worst dip since independence. In the month of October-December of 2020, the economy grew by 0.4%, the inflation maintained till quarter four where the GDP grew by 1.6%. In the month of January-March, when the whole economy was near normalcy, everything was opened up. The business and shops were asked to close up due to COVID, the state imposed lockdown in the second wave.

The country is also expecting the third wave of COVID, then what would the number tell us about the future of Indian economy? What are the keyways to deal with this situation? Will delay in vaccination affect the growth of the economy?

ROLE OF JUDICIARY FOR SECURING THE RIGHTS OF CONSUMER AND SELLER

Consumer Court has been set up for special purposes, deals with cases related to consumer conflicts and disputes. Government established Judiciary hearings for protection of consumer rights. This court has been established to perform fair practices and contracts by sellers. Consumers are provided with a right to file a suit against the seller if they are exploited by sellers. There are certain rights granted by the consumer court to all the consumers. Those rights are given as follows:

Right to Safety: This right gives protection from all kinds of dangerous goods and services.

Right to Information: The right to be totally aware or informed about the presentation and quality of goods and services.

Right to consumer Education: This right provides absolute consumer education about the goods and services.

Right to Choose: The right provided to consumers to choose any goods and services.

Right to Redressal: The right to ask for compensation, anytime when the right of the consumer is exploited.

Right to be Heard: The right to be heard in decision-making procedure regarding consumer interest.

The main objective of consumer court is to give extra privilege to consumers and to maintain the duties of sellers or services towards consumers.

In the Sale of Goods Act, 1930, certain rights are given to the seller. The seller is free to move to court if any of his given rights has been exploited. Such rights have been given below:

To exercise lien and keep possession over the goods, until payment of price defined under section 47(1).

To resell the goods under some circumstances (section 54).

To sue the buyer for the price when the property in the goods has passed to the buyer or when the price is paid on a certain day, in terms of the contract, and the buyer fails to make the payment (section 55).

To reserve the right of disposal of the goods until certain conditions are fulfilled defined under section 25(1).

To deliver the goods only when applied for by the buyer (section 35).

To stop the goods in transmit and resume possession of the goods, until payments of the price defined under section 49(2) and 50.

To assume that the buyer has accepted the goods..

CHANGES IN CONSUMER PROTECTION LAW

On the date 06 August 2019, the new Consumer Protection Bill was passed by the Parliament, through the suggestion of Rajya Sabha. It was earlier presented in Lok Sabha on July 30, 2019. This bill replaced the Consumer Protection Act, 1986.

Provision

Consumer Protection Act, 1986

Consumer Protection Bill, 2019

Filing of Complaint

In this act, the complaint needs to be filed in consumer court where jurisdiction of the seller falls under.

A complaint can be filed from where the consumer lives or anywhere.

Mediation

No provision for mediation

Courts can work for the settlement by the way of mediation cells.

Jurisdiction

The jurisdiction at District level had a complaint worth of Rs. 2 lacs.

Can take complaint by District level authorities with goods and services worth up to Rs. 1 crore.

Product Liability

No provision for product liability.

Consumers are provided with the right to ask for compensation for any exploitation.

E-Commerce

No provision for E-Commerce.

Transaction will come under the provision comprising direct sales.

Video Conferencing

No provision for Video conferencing.

Consumers can seek hearing via video conferencing.

Regulator

No Central Regulator.

Central Consumer Protection Authority to be established.

CONCLUSION

There are certain steps which must be taken by Indian Government to bring India’s economy on track after the decline of GDP.

The small producers should be given interest-free loans who have incurred losses for restarting operations.

The Government should reduce the expenses on unnecessary goods despite giving money to the state for investing in health care. This could improve the confidence of an individual. They should get encouraged to keep doing economic activities normally by following personal care.

The Government should invest to provide migrant workers a safe and comfortable atmosphere. The inflow of migrant workers should revitalize the migrant economy.

Curated by Athira Albert of Kristu Jayanti College of Law, Bangalore.