Is India facing a recession?
Arvind Subramaniam warns about the great Indian slowdown. Rajan suggests a way out.
Arvinda Subramaniam warns about the great Indian slowdown. Rajan suggest the way out.
World’s leading economist Arvind Subramaniam calls the current state of Indian economy as ’the great Indian slowdown’. It is primarily because of lack of growth of industries and exports. It will not go away soon.
Indian economy was this bad 30 years ago. There is recession in manufacturing. GST has slowed down the government’s revenue. The growth has come down from the targeted 14% to about 5%. Jobs have disappeared. Power tariffs are going up. Real estate prices have fallen. As a result spending is going down. Finally the formal sector is going to get hit. This makes it a classic recession.
Vivek Kaul equates this with the Great Depression of 1929: The answer lay in the mind of consumers. According to Shiller, “Those who already owned a car decided to keep the car going rather longer. Those who did not own a car, decided to continue taking public transportation.” For those who lost their jobs, it obviously made sense to postpone purchasing a car. Even those who were not impacted by the Great Depression postponed their car purchases (and purchases of other thing as well) given that they had a huge fear of losing their jobs.
Raghu Ram Rajan, ex-RBI governor had shared a 10 point plan to improve the economy. It included labour reforms, decentralising decision making, better tax & regulatory framework and fast-track bankruptcy.
Dig deeper:
Video: Raghuram Rajan — India’s Economy: How Did We Get Here and What Can be Done? Link