Half Full Or Half Empty, The Glass Needs To Fill

The economy may not be in recession, but it is certainly gripped by a recessionary mindset

- R Srinivasan

It is official. Finance Minister Nirmala Sitharaman has said — that too, in Parliament, to which the government is nominally accountable — that there is no recession in the country. “If you are looking at the economy with a discerning view you see that growth may have come down, but it is not recession yet or it won’t be recession ever,” she declared on Wednesday, while replying to a debate in Rajya Sabha on, well, the slowdown.

That India will never have a recession is a pretty strong statement to make, but it is a reasonably safe bet. Given its 1.3billion population — and the fact that our population is still growing, barring short-term dips — it is pretty difficult to imagine a scenario where the real economy contracts sharply, over a sustained and long period of time, which is what a real recession looks like.

The challenge really is the slowdown. Given the size of the economy; given the inequalities within the population; given that in absolute terms, the largest number of the world’s poorest are Indians; and given the fact that our demographic profile is sharply skewed towards an young, aspirational population it is not surprising that the projected growth rate for FY20 — anywhere from the RBI’s 6.1 per cent to SBI research’s 5 per cent (take your pick) — is widely seen as a slowdown. In fact, economist Arun Kumar, an expert on the informal economy, has said that the economy is actually shrinking, since the informal sector, which was flattened by demonetisation, is showing no signs of recovery.

Temporary uptick