Editorial , "INDIAN ECONOMY TOWARD RECESSION?" in LAW ANIMATED WORLD, 31 August 2019 issue, Vol. 15, Part 2, No. 16

INDIAN ECONOMY TOWARD RECESSION?

It is quite a worrying prospect though; but certainly there has been a serious economic slowdown. Also, many scholars opine that the much proclaimed near-7% annual growth rate in GDP during the last 5-year term is an eyewash, it could not be more than 5-6%, certainly a considerable decline from the previous rule under Dr. Manmohan Singh, who also feels demonetization and hasty steps of GST are two prominent factors for this sluggishness. The havoc caused by demonetization so arbitrarily brought about by the Prime Minister Modi is indicated as a chief cause by many, who say it only enabled colluding corporate crooks to enormously profit. The phenomenal growth of Paytm, Jio, etc. are shown as examples, as also the later instance of Anil Ambani brokering the Rafale Jet planes purchase deal for Modi, though nobody is questioning the enormous, ever-escalating defence spending in India, exacerbated by the fanatic, belligerent policies of the government. Well, lesser GDP growth rates may themselves not indicate recession as the above graphs pertaining to developed countries show, but continuous shrinkage over 2-3 quarters does so. Certainly from the last two quarters GDP growth has considerably slowed down and manufacturing sector suffered most – which is no good. Economists like Madan Sabnavis are optimistic that the coming months – Hindu festival seasons and good monsoon aiding – may avert recessionary trends though certainly there is an undesirable slowdown. Nitin Bhatia is more vocal in censure: “I still remember golden period of late 80’s or early 90’s, when life was so simple ……No Internet, No Satellite TV, No Mobile & Our economy was also very simple … totally & purely dependent on monsoon. ......reason being it was totally dependent on agriculture sector for GDP growth as contribution of Service and Manufacturing was comparatively Low…. In 1992 our foreign exchange dried up and Gold reserves were dispatched to England to save the economy…. In 1992, India’s Fiscal deficit reached 8% of GDP and India became bankrupt. Today India’s Fiscal Deficit is touching 6% therefore if situation in not brought under control soon then our generation will face the worst recession so far.” Even Subramanian Swamy (BJP) is not happy about the performance of the Modi Government in the economic sphere and the haphazard moves of the government to counter by merger of public sector banks etc., which he warns may be a diversion of efforts and counter-productive. May be Niranjan Rajyadhyaksha (Meghnad Desai Academy of Economics) rightly points out the one ‘brutal fact’: “If the Indian economy continues to lose momentum over the next two quarters, then the country will be in its longest growth recession in a decade.” §§§