Economic recession and the situation of India

Experts had already predicted that the post-Covid era will witness economic recession all over the world. Its results have been seen in many countries including Sri Lanka. But so far we cannot say that the global economy has been hit by a severe recession. One cannot say how the ongoing war in Ukraine will have consequences on the global economy.

One fact that various recent surveys pointed out about the state of the recession gives hope to India. The surveys showed that India does not have to fear even if the situation worsens in countries, including the USA.

All the surveys said that India has the least chance of slipping into economic recession. Asia's risk of recession is around 20-25%, while that of Europe stands at 50-55%. India has zero probability of slipping into recession. Although the US is a major economic powerhouse, the probability of the country slipping into recession remains at 40 percent. India has been helped by the fact that the agricultural sector remained strong even in the Covid era and the revival of the activities in the industrial production sectors. The growth graph has not gone down but up in the service sector as well. It is said that true friends are those who help in times of danger. In that way, one can see that Russia has helped India the most in recent times. India has bought 66 billion barrels of oil from Russia since March this year. It also bought soybeans, coal and fertilizers from Russia. India was attracted by the low rates offered by Russia. In this scenario, the Reserve Bank observes that India will escape from the clutches of global inflation. Crises often turn into opportunities. The fact that India has moved away from dependence on China and that many other countries have started approaching India for their large manufacturing units open up huge opportunities for growth for our country. Stable governance at the Centre and economic liberalization measures should be considered as growth-enhancing factors to a large extent. At the same time, rising prices and the fall of rupee are raising concerns. During the growth phase, a large amount of imports will be required. India imports crude oil, industrial raw materials, gold etc on a large scale. Since all these transactions are in dollars, the cost of import will be high. Hence trade and current account deficits will also rise. As a result of this, the price hike will also increase. If this is left unaddressed as a growth problem, the government will face political backlash. Therefore, the Centre should take urgent administrative measures to contain the price hike. It should consider measures including reducing taxes on essential goods. Common people feel that the government is growing when their income increases and their expenditure decreases. The central government should create such a situation in the coming days.