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Andhra Pradesh

Economy on path of revival: expert

Special Correspondent

Indian economy passing through a slowdown, not recession

-Photo: Mohd. Yousuf

Expert opinion: Shyamal Roy delivering the lecture on “Current Economic Environment for Business” organised by Automatic Data Processing, Inc in Hyderabad on Thursday.

HYDERABAD: Professor of Economics, Indian Institute of Management (IIM), Bangalore, Shyamal Roy on Thursday said there were early signs of the revival of the Indian economy which was passing through a slowdown and not recession.

Delivering a talk on ‘The Current Economic Environment for Business’ organised by ADP Private Limited, the Indian subsidiary of the U.S.-based Automatic Data Processing, he said the credit crisis was being increasingly corrected. Foreign Institutional Investors were coming back resulting in the revival of the stock market. Besides, the Reserve Bank of India pumped in liquidity which enabled the banks to lower the interest rates.

However, the revival would become sustainable if there was increased government spending on productive activities and would fizzle out if it was on unproductive works. Normally recession was caused when the economy clocks negative growth rate for two consecutive quarters which was not the case with India unlike many other countries.

The GDP growth rate of seven per cent was fantastic when compared with others. Prof. Roy said the global economic meltdown was not going to impact India since only 15 per cent of the GDP was dependent on the external sector demand (exports).

Giving an overview of the global meltdown, Prof. Roy said the meltdown was unusual this time as the usual fiscal and monetary tools for revival of economy did not work.

That was because the problems were created by the financial sector and not real sector. Describing “anti-outsourcing measures” initiated in the United States as a “political gimmick”, he said the US government would come under pressure from its own businesses to halt the measures as outsourcing becomes more important to cut costs in times of crisis.

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