Table of Contents
- The year 2020 could see the worst global economic fallout since the Great Depression in the 1930s-
- With over 170 countries likely to experience negative per capita income growth due to the raging coronavirus pandemic.
WHAT WAS THE GREAT DEPRESSION?
- It was a major economic crisis that began in the United States in 1929, and went to have a worldwide impact until 1939.
- It began on October 24, 1929, a day that is referred to as “Black Thursday”, when a monumental crash occurred at the New York Stock Exchange as stock prices fell by 25%.
- While the Wall Street crash was triggered by minor events,
- The extent of the decline was due to more deep-rooted factors such as-
- Fall in aggregate demand, Misplaced monetary policies, and
- An unintended rise in inventory levels.
- In the United States, prices and real output fell
- Industrial production fell by 47%.
- The wholesale price index by 33%.
- Real GDP by 30%.
- The havoc caused in the US spread to other countries mainly due to the gold standard.
- In almost every country of the world, there were massive job losses, deflation, and a drastic contraction in output.
UNEMPLOYMENT
- Unemployment in the US increased from 2% to 25% between 1929 and 1933.
- In the UK, it rose from 2% to 15.4% between 1929 and 1932.
- The Depression caused extreme human suffering, and many political upheavals took place around the world.
- In Europe, economic stagnation that the Depression caused is believed to be the principal reason behind the rise of fascism, and consequently the Second World War.
GREAT DEPRESSION IMPACT INDIA
- There was a drastic fall in agricultural prices.
- Credit contraction occurred as colonial policymakers refused to devalue the rupee.
- It has an important impact on India’s freedom struggle.
- Soon after Mahatma Gandhi had launched the Civil Disobedience movement, effects of the Depression became visible around the harvest season in 1930.
- There were “No Rent” campaigns in many parts of the country.
- Radical Kisan Sabhas were started in Bihar and eastern UP.
- This provided support to the Congress, whose reach was yet to extend into rural India.
- Landslide victory in the 1936-37 provincial elections.
- Abandoning the gold standard helped the economy grow.
CURRENT SCENARIO
CONCLUSION
- Things are very different from what was it in 1930s.
- Now we have robust monetary system in place.
- If we are able to tackle the pandemic, the economy is expected to recover sharply.