November 05, 2019

Opinion | What mild signs of an economic recovery imply for Indian policy

In this article for the Mint, Niranjan Rajadhyaksha discusses a mild economic recovery for India in the second half of the fiscal year, provided it is bolstered by stimulus measures.




"... However, there is still reason to believe that the Indian economy will see a mild recovery from the third quarter. There are three reasons for believing so. First, the strong monsoon in most of the country should be good for the winter crop. Second, there is likely to be some sequential improvement in aggregate demand as lower interest rates begin to make an impact after the usual lags. Third, there will be a statistical boost from the base effect."


He concludes by saying 


"A stronger recovery seems unlikely right now, given the overall synchronized slowdown in the global economy as well as the fresh round of stress in the financial sector, especially in shadow banks. There continues to be a case for stimulus, given the fact that growth continues to be below potential, but this space is also narrowing."


Read the complete article here.

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