No prospect of recession in India in near future, economy to grow 6%-7% next fiscal 2023-24: Rajiv Kumar – Former Chairman of Niti Aayog, Government of India.
The former Niti Aayog vice-chairman said a synchronized downturn in the US, Europe, Japan and also China could push the global economy into recession in the coming months.
India GDP in Fiscal 2023-24
India will still grow by 6% to 7% in the next fiscal 2023-24, even as uncertain global conditions may affect the economy, former Niti Aayog vice-chairman Rajiv Kumar said amid growing fears that the world is slipping into recession.
Mr. Kumar further said that there is a synchronized decline in the US, Europe, Japan as well as China, which could push the global economy into recession in the coming months.
“Fortunately, there is no such prospect of a recession in India as although our growth may be adversely affected by global conditions, we will still manage to grow at 6-7 percent in 2023-24,” he told PTI in an interview. .
The World Bank on October 6 forecast a 6.5% growth rate for the Indian economy for 2022-23, down one percentage point from its June 2022 projections, citing a deteriorating international environment, while the IMF projected a growth rate of 6.8% in 2022. compared to 8.7% in 2021 for India.
IMF chief Kristalina Georgieva said the world economy is moving from a world of relative predictability to one of greater uncertainty.
Impact of Recession in India on High Inflation in 2023-24
Responding to a question about high inflation, Mr. Kumar said that retail inflation is likely to be in the range of 6-7% for some time to come.
“After that, my guess is that it should start to peak and then go down,” he said.
Mr Kumar added that much depends on global oil prices as they may continue to rise due to the ongoing conflict in Ukraine.
“But otherwise, the domestic drivers of inflation will cool down,” he noted. Retail inflation eased to 6.7% in October, suggesting an easing of the price situation, while the wholesale price index fell to a 19-month low, mainly due to subdued food rates.
The central bank is mandated to maintain inflation at 4% with a 2% pro-inflation and downward margin. Asked about the impact of the weakening Indian rupee on the common man, the former vice-chairman of Niti Aayog said that the common Indian does not use many imported goods or services in his consumption basket.
According to Mr. Kumar, a rupee close to its true value is much better for the economy than an appreciating rupee, and a depreciated rupee does not pose many downside risks.
Regarding India’s growing trade deficit, Kumar said with negative export growth in October, it is clear that the country needs a real policy focused on this area to expand its exports of both goods and services.
“We must now formulate a state-specific export promotion policy. Because having a single export promotion policy for the entire country does not make sense,” he said.
He further stated that like Punjab is a double landlocked state and Tamil Nadu is a coastal state and has centuries of trade experience. “So having the same policy of, for example, both of these states is not relevant,” he emphasized.
Impact of Recession in India on Import and Export Business
India’s exports turned negative after a roughly two-year hiatus, plunging 16.65% to $29.78 billion in October, mainly due to a slowdown in global demand, even as the trade deficit widened to $26.91 billion.
Imports rose about 6% to $56.69 billion during the month under review due to a rise in inbound shipments of crude oil and some raw materials such as cotton, fertilizers and machinery.
Asked about the transition of some states to the old pension scheme (OPS), Mr Kumar said: “That is a step backwards. And I don’t think it should be done.” He believed that it was being promoted by some opposition parties for populist measures.
“I think the Indian economy, the Indian working class, the Indian middle class are maturing and can manage their own pension funds and take advantage of the new pension system, which offers much more options than the old pension system,” Kumar said.
The Punjab Cabinet on Friday approved the re-implementation of the old pension scheme, which was discontinued in 2004.
Causes, Effects and Avoidance of Recession in India
The world is facing many problems related to Covid in 2019. Life before and after covid has undergone a significant transformation. The world is dealing with two wounds at once. Different nations have problems with their economies and health. Many nations are developing and implementing various measures to restore order and get the economy back on track.
Why India will not go through recession and will continue to be a favorite of FIIs
However, according to a recent survey, most developed countries are expected to experience a recession. USA, UK, New Zealand, Philippines, China, etc. could experience recession in the coming year. However, the survey said there is essentially no danger of a recession in India. After breaking the barrier of 80 rupees per dollar, the Indian currency hit an all-time low.
However, a Bloomberg survey said there is very little chance of a recession in India. According to the analysis, India’s chances of entering recession in india are virtually negligible, but rich countries and continents like the United States, United Kingdom, New Zealand and several other European countries will be at risk.
How Robust is the Indian Economy to Fight recession in India
Everyone realizes that the US economy is the mother of all economies and that almost every other country’s economy is dependent on it. This is due to the fact that the US dollar is the main trading currency worldwide. In addition, the United States, a developed country, has a significant influence on global trade in terms of the provision of goods and services.
But the world is moving towards a new ecosystem right now. The center of global power is evolving. Today, the economies of all nations operate independently. The risk of recession is currently very high for industrialized countries, but in this environment, the Indian economy is doing well and is on track to reach $5 trillion in GDP.
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When the COVID-19 pandemic devastated the Indian economy, the Government of India and the RBI, the national central bank, made many wise decisions. As a result, India is doing quite well and is on track to reach its $5 trillion GDP target, while the rest of the world is struggling and heading into recession. India’s economy is expected to reach $4.7 trillion in 2024 and $5 trillion by 2026, according to the IMF.
Recession in India 2023 Probabilities
The probability of an Asian recession is 20-25% according to the latest Bloomberg report. The probability of a recession in Sri Lanka is 85% even though the country is on the verge of bankruptcy. If the US government does not take action as a whole, developed countries like the US risk entering a recession. There is a 40% chance that the United States will experience a recession by next year.
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The Russia-Ukraine war is the primary cause of the global recession, which is expected to hit Europe with a 55% probability. Few other countries, including New Zealand, Taiwan, Australia and the Philippines, have a 33%, 20%, 20% and 8% probability of recession. Japan and South Korea are also at risk of recession. There is a 25% chance that one of them will experience a recession. A recession in Pakistan is 20% likely.
Recession in India: what is it?
An economic recession is a phase of the business cycle characterized by a slowdown or contraction of all business and economic activity. Although there is no strict guideline or precise definition of what constitutes a recession, officially a country is considered to be in the red for one of two of the last three quarters of its economy. There are several reasons why a recession occurs, including the following: financial crisis, economic crisis, foreign trade crisis, economic bubble, natural disaster, health risks, excessive external and domestic indebtedness, etc.
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What are the Causes of Recession in India?
Recessions always have different causes in different nations and economies. In no case is the cause required to be the same in all circumstances. This can happen for a variety of reasons.
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The Main Cause of Recesion in India may be Including:
- Less public and government spending
- Stock market collapse – Recession in India
- Higher interest rates
- A decline in industrial production
- Poor economic management – Recession in India
- The upheavals of war
- Credit crunch – Recession in India
- The unnatural disaster of deflation
- Bad debt management etc.
What are the consequences of a recession in India?
A recession causes a lot of losses to the economy, simply put. Higher unemployment, reduced purchasing power, lower earnings and incomes, reduced chances for private investment and education, and higher unemployment are all consequences of a recession that cause economic losses.
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History of Recession in India
There is no clear definition of recession. Refer to this Article for Meaning and Definition of Recession. Several international financial institutions define recession differently. However, the generally accepted definition is that a country is technically in recession if its overall economic activity declines for two consecutive quarters. Earlier, after independence, India experienced numerous recessions due to various causes but always recovered and reached new heights. Fiscal years 1958, 1966, 1973, 1988, 2000, 2008 and 2020. India experienced recession in each of these years and each time the cause was different and new.
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Biggest Recession in World History
List of World wide Recession in History
- The 1938 self-directed recession
- V-Day Recession in 1945
- 1948 Post-war slump
- The investment crash of the 1957 recession
- The 1973 oil embargo recession
- The 1991 Gulf War Recession
- The dot-bomb recession of 2000
- The Great Recession of 2007
- Covid 19 recession 2020