ECONOMIC AND MARKET CYCLES ARE NORMAL, NOT A CAUSE FOR CONCERN

George Stigler, the Nobel laureate economist, once famously said that “abnormal is when everything is normal.”

Most people regard downturns in the economy as disasters. But the fact is that business cycles – expansion and contraction of economic activity – are normal in market economies.

Indian economy is going through a sharp downswing. It is a fact that the slowdown has turned out to be sharper than everyone expected. Even institutions rich in economic talent – IMF, World Bank, OECD, our own CSO, RBI, and Investment Banks – got their growth forecasts for FY 20 wrong. The projected GDP growth of FY 20 is now at 5 per cent: this would be an 11-year low. Now there is a consensus that growth has troughed out and recovery will begin in the next couple of quarters.