India's Economy Shrink by 5%, Recession in Last 70 Years
WHAT IS RECESSION?
• Recession refers to a phase of the downturn in the economic cycle when there is a fall in the country’s GDP for some quarters.
• It begins after the economy reaches a peak of activity and ends as the economy reaches its trough.
• A common rule of thumb for recessions is two quarters of negative GDP growth.
WHEN HAS INDIA SEEN A RECESSION?
From 1957 up to the pre-liberalisation period, India witnessed four years of an actual fall in output or negative growth in GDP. These were in the years 1957-58, 1965-66, 1972-73 and in 1979-80.When the economy grew at -1.2%, -3.7%, -0.3% and -5.2%, respectively.
REASONS BEHIND RECESSION
These were mainly on account of either Oil price shocks characterised by high oil prices or Drought that led to a sharp fall in agricultural production or both.For emerging economies like India,Economists say that recession can be categorized as a period of a downturn in the business cycle much below the previous trends and doesn’t necessarily need to be accompanied by negative growth rates.Hence, economists contend that India has seen periods of recession in the post liberalization period without actually seeing negative GDP growth rates.
The first recession was from 1999-Q4 to 2003-Q1;
The second recession was from 2007-Q2 to 2009-Q3;
The third recession ran from 2011-Q2 till 2012-Q4
The first bout of recession between 1999-2003 was in the aftermath of the Asian financial crisis that prompted the central bank to increase the repo rates to protect the rupee. This had an adverse impact on growth.The second recession was around the time of the global financial crisis of 2008.The third recession between 2011 and 2012 was in the aftermath of the rapid rise in the country’s fiscal and current account deficit and a period of high inflation.Hope the article on this site [world news|international news] provide you a best knowledge about world news. Don't hesitate to share with yours friends.
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