Arvind Subramanian Speaks About India’s Economic Slowdown
The economic slowdown is the one which India is undergoing right now. Arvind Subramanian, Ex-Chief Economic adviser who has done great work on Indian Economy and its great slowdown. In an interview with NDTV, he spoke about various things including What are the signs of things going right or wrong? How bad is the Indian Economy? How to resolve the ongoing problem? and What are the positives and negatives?.
As per the Government data, India’s GDP growth fell to 4.5% now. Earlier it was at 8% in Q1 during the period 2018-19. Since then it has been going down.
India’s growth rate worse than what data shows? Could India’s growth rate even less than 4% in reality?
Arvind said GDP figures not as informative as they used to be. Besides, the GDP numbers need to be looked at carefully. When we look at the more detail and macro indicators you will get the impression that even 4.5% growth probably higher than in reality.
“We are going through the great slowdown that we haven’t witnessed in 30 years. It’s not just an ordinary slowdown,” he added.
How bad is it the Indian Economy and Economic slowdown?
He further said “during the years 2000-02, GDP growth was around 4.5%. At that time, all the economic indicators were marginally positive. We had seen the negative indicators in 1991 when GDP growth was around 1%. Now the ongoing situation is like that. Predominantly, we could see India’s concerning slowdown in Consumer Goods Production. Now, the growth rate of Consumer Goods Production plunged to 1% from 5% two years ago.”
Is the growth rate of Consumer Goods Production worrying?
Subramanian said “Here most indicators are in negative growth territory. It’s India’s great slowdown. Currently, we don’t have any macroeconomic crisis. One of the achievements of the Govt that has been stabilising the macroeconomy. We have very strong macroeconomy in terms of relatively low Inflation, healthy reserves, no external debt problems, not having currency crisis. But, the Slowdown manifesting itself in the real sector of the economy includes growth, investment, exports, imports, jobs, peoples incomes, peoples wages and Government revenue.”
“It also matters for how much revenue the Govt is going to spend on the social program. On the other hand, India’ huge foreign exchange reserves a big positive,” he specified.
The growth of electricity generation in India is really in a serious state. Currently, Electricity Generation growth at around 1.8%, the lowest in 30 years. Is Electricity generation the sign of a great slowdown?
Arvind thinks it is one among the many indicators of an economic slowdown. He also feels it is an important indicator that reinforces all the other indicators which suggest that something serious is happening in the economy.
During the year 2019-20, the export growth rate plummetted to -1%. On exports growth rate he said, the falling in exports growth rate is mainly due to the global economy is not doing well. Besides, Services exports did very well earlier, now they are doing just modestly well.
Right now, Direct Tax revenues growth dropped to 0%. Earlier it was at 16% during the year 2017-18 and at 10% during 2018-19. On growth in Direct Tax Revenues, he said tax revenues adjusted for inflation he said, the Government squeezed for resources. “GST revenue performance has been quite good. Tax revenues have come down not because of the GST is doing badly but because of the economy is performing badly,” he emphasized.