Former Chief Economic Adviser Arvind Subramanian has termed the economic crisis in the country as a “great slowdown” and that it is in the “intensive care due to structural and cyclical factors”.
Subramanian made these comments while delivering a speech at the Bangalore International Centre based on his research with former International Monetary Fund resident representative to India Josh Felman earlier this week.
“We should look at with the seriousness conveyed by the indicators,” Subramanian said. He said the government has recognised the slowdown and taken actions to address the problems.
He said that the country has not witnessed land and labour reforms for 20 years and yet between 2002-2010 the economy boomed, adding that this cannot explain the current slowdown or the past growth.
The economist blamed the fall in investments and exports as critical reasons for the current economic situation. “The growth collapse itself now creates a dangerous vicious cycle,” he said in his address.
Subramanian said personal income tax cut and raising Goods and Services Tax rate on the other hand are not going to help the economic situation.
India reported that its Gross Domestic Product had contracted to 4.5% in the July-September quarter – the slowest growth rate in more than six years, and the sixth straight quarter of slowdown. The growth rate in April-June was 5%. Core sectors such as automobiles and manufacturing have also slowed down gradually due to weakened consumer demand and dearth of investments.