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INDIA AND THE GREAT DEPRESSION

INTERDISCIPLINARY PROJECT SOCIAL SCIENCE CLASS 10 

Impact of the Great Depression

The Great Depression in India was a period of economic depression in the Indian subcontinent, then under British colonial rule. Beginning in 1929 in the United States, the Great Depression soon began to spread to countries around the globe. A global financial crisis, combined with protectionist policies adopted by the colonial government resulted in a rapid increase in the price of commodities in British India. During the period 1929–1937, exports and imports in India fell drastically, crippling seaborne international trade in the region; the Indian railway and agricultural sectors were the most affected by the depression. Discontent from farmers resulted in riots and rebellions against colonial rule, while increasing Indian nationalism led to the Salt Satyagraha of 1930, in which Mahatma Gandhi undertook marches to the sea in order to protest against the British salt tax.

How did the Great Depression impact the American economy? 

The U.S. economy shrank by a third from the beginning of the Great Depression to the bottom four years later.

  • Real GDP fell 29% from 1929 to 1933.
  • The unemployment rate reached a peak of 25% in 1933.
  • Consumer prices fell 25%; wholesale prices plummeted 32%.
  • Some 7,000 banks, nearly a third of the banking system, failed between 1930 and 1933.

India's current economic situation

Economic Outlook

After real GDP contracted in FY20/21 due to the COVID-19 pandemic, growth bounced back strongly in FY21/22, supported by accommodative monetary and fiscal policies and wide vaccine coverage. 

In FY22/23, India’s real GDP expanded at an estimated 6.9 percent.

Real GDP growth is likely to moderate to 6.3 percent in FY23/24 from the estimated 6.9 percent in FY22/23.

Both the general government fiscal deficit and public debt to GDP ratio increased sharply in FY20/21 and have been declining gradually since then, with the fiscal deficit falling from over 13 percent in FY20/21 to an estimated 9.4 percent in FY22/23.

Public debt has fallen from over 87 percent of GDP to around 83 percent over the same period.

Economic Growth In United States

The United States saw robust GDP growth from 2013 to 2019, driven by strong consumer spending and technological innovation. However, growth was disrupted by the COVID-19 pandemic in 2020, leading to a sharp but brief recession. The subsequent recovery in 2021-2022 was rapid, fueled by significant fiscal stimulus and monetary support.

The United States recorded an average real GDP growth rate of 2.3% in the decade to 2022, above the 1.8% average for Major Economies. In 2022, the real GDP growth rate was 1.9%.

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