Staring At Recession

Slackening demand likely to hamper growth; government’s announcements are merely sentiment boosters, say experts.

- Salil Panchal

The noise of a recession is starting to get louder. India’s 5 percent growth for the three months ended June is the slowest in a quarter since March 2013. What is worrisome is that the government is not willing to admit that the country is in the midst of a “cyclical downturn” as stated by the Reserve Bank of India (RBI). Data seems to indicate that as well.

Private consumption, manufacturing activity and industry have all slowed sharply from the previous quarter. Will things get worse? Most likely, yes. The government might find temporary comfort in better numbers in H2FY20 (October 2019 to March 2020), but this could be due to last year’s base effect.