Recession in India: Facing the Facts

Photo by Andre Taissin on Unsplash

Oh no, not again! 

The Indian economy is facing another wave of headwinds, with inflationary pressures and poor demand seeing a sharp uptick. Times were already troubling enough for the central banks, which were winding back the pandemic-era measures intended to support growth during an economic downturn.

To add to it, amid the ongoing Russia-Ukraine war, the Indian economy also faces headwinds from global spillovers from geopolitical tensions, elevated commodity prices, and moderating external demand.

Fear of yet another economic recession lurks in the air. 

How bad is it going to be?

“It is not a recession, but growth slowdown risk is definitely more elevated from the medium-term perspective, i.e, in the next 12-18 months,” said Indian economist Sonal Varma.

To cut it short, India would approach a technical recession when it sees two consequent quarters of GDP decline.

Respite after the storm: In the economists’ view, India is in a much better place in terms of inflation as compared to other countries. Q4 GDP at 4.1% has turned out to be better than estimated. 

Can’t blame the RBI either for not tinkering with the GDP forecasts for fiscal 2022-23. It slashed its growth projections for the fiscal 2022-23 to 7.2% from its earlier forecast of 7.8%.

This definitely got us on our toes; how about you?

Too long? Here’s a one-liner: Economists forecast an upcoming recession in the next 12-18 months; elevated commodity prices, global spillovers, and poor demand are to blame. 

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