Growth comes from either accelerator and or multiplier, when consumption increases first and, later, investment and more employment and demand and further consumption it is the accelerator and when investment increases and it further increases consumption and further investment...
Investment reinforces or induces investment ie multiplier and consumption reinforces or induces consumption ie accelerator...
Lower prices increase demand, other things remain constant, lower prices increase the value of money and consumption and demand and price expectations and higher prices decrease the value of money and increase and investment and supply and price expectations...
Lower price expectations again reinforce lower prices and vice versa... Because what people expect too much becomes a reality if the expectations are rational... a rational expectation is a common belief... about prices and consumption and investment or demand and supply...
If the rational expectation is that price would fall they would hold spending and increase supply which could reinforce lower prices and it they expect higher prices they would increase demand and spending and hold supply which could further increase prices...
In the West productivity has increased, especially labour, but real wages has been as low as back in 1970s, that has put a lid on demand, though supply has increased... Higher money supply and low borrowing cost in the past decades have kept inflation low...
Depreciation, lower wages, interest rate and exchange rate have increased demand of exports at the cost of domestic demand, though supply side and imports have strengthened that shows weak Phillips curve relationship between inflation and unemployment ie inflation would increase after full employment...
Nevertheless, lower wages and interest rate have increased the productivity of labour and capital and supply.., but not their product, wages and interest rate which have depressed demand and increased supply and is reinforcing lower consumption and investment and lower prices... Higher real wages and interest rate expectations could increase spending, both consumption and investment, and prices and growth...
Typically, low growth is marked by low prices and vice versa... The objective is price stability at full employment and growth... If prices at the full employment are stable, neither inflation nor deflation we must cheer the stability... In the West supply side has improved alot tokeep prices stable at full employment... Stability would help to keep up investment…
Lower inflation or a strong domestic exchange rate and a strong foreign exchange rate or appreciation lower import cost/prices could also increase export competitiveness... Lower inflation means a strong currency and cheaper exports, too...
Today money's value is tied to nothing and the central bank prints currency while maintaining inflation targets; it is not tied to gold or anything... These are investment goods with a value in currency terms or exchange value, these bitcoins and the major Tesla viewed by investors as profitable ventures, there is nothing like bubbles if it is backed by earnings growth... if inflation is low and stable... Many central banks have allowed bitcoin exchange and in the stock market...
INDIA direct taxes are highest among peers... To increase real wages and incomes the GOI may reduce incomes tax that would also increase competitiveness and demand, when there is limited transmission of lower cost to prices, like lower interest rate transmission by banks and higher prices in the real estate...
Budget may try to build dams to stop floods (and generate electricity, too) and improve irrigation facilities to control seasonal food inflation and help stabilise the interest rate regime which could increase productivity and competitiveness and demand...
Farming is the oldest form business... Most of the growth models in economics are based on agriculture... By selling lower to achieve economies of scale big farmers are hurting small and marginal farmers, it is the basic strategy in any market to gain the market share, lower prices and larger pie of the market... Look at oil producing countries...
Indeed big subsidies have lowered cost and the farmers are selling even lower than the actual cost... especially the small ones...
Due diligence must be given to the fact that the growth has not been negative; it is negative only when compared to the last quarter or last year... For example, if the last quarter or year growth rate was 7%, a - 24% lower growth rate would be -24%/7% equals 3.4%...
The growth rate is positive but lower compared to the last quarter and year... Higher inflation expectations from a lower base would help maintain spending or due to lower prices which could reinforce demand and prices... Every paisa spent anywhere would further increase income and demand and spending...
GDP Constant Prices in India increased to 33141.67 INR Billion in the third quarter of 2020 from 26895.56 INR Billion in the second quarter of 2020. Source: Ministry of Statistics and Programme Implementation..
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