‘Continue With The Trade Negotiation Strategy'

Bibek Debroy, Chairman, EAC-PM, discusses with BW Businessworld the present economic slowdown and stresses that the slowdown is not particular to the Modi regime. Excerpts from the chat:

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On the economic slowdown

The slowdown is not something that suddenly started in 2014. It has been going on for a fairly long time. And there are reasons for the slowdown, and a large part of this is because of what has been happening locally.

There was a time when the GDP growth rates in India crossed 9 percent. That was a period when the external world was kinder. Much of the slowdown is not typical to India and I think it’s important to recognize this if one is not unnecessarily trying to politicize it. It is not as if there has been a sudden slowdown in May 2014. There’s been a continuous deceleration.

On US-China trade war and the consequent recession

There are a few countries in the world that have run into a recession. Some may be heading towards it. Certainly, the word recession should not be used in the Indian context because we have witnessed a GDP growth of 6.8 percent for the last full year. By no stretch of imagination can this be called a recession.

When you see the global environment, there is not much one can do because of the trade friction between the US and China. Some of it is a consequence of the fact that the multilateral trading system and multilateral negotiations are stuck. Similarly, the regional or bilateral negotiations are also not proceeding fast enough when you have an uncertain environment, which is obviously impacting the export of goods and services.

From the national income point of view, what is important is, of course, net exports. If there is global uncertainty and a global slowdown then obviously the demand side does not look that bright. The best you can do is to continue with the trade negotiation strategy. The exchange rate has its own issues. So the only thing you can hope to do is to have supply-side improvements, which the government has been doing whether it’s on the logistics side of the custom side.