What is recession?
A recession is called a crisis when GDP declines for at least two consecutive quarters.Employer layoffs, a dip in consumer and corporate expenditure, and a drop in industrial production are common symptoms of recessions. Although it is a regular component of the business cycle, it may have profoundly harmful repercussions on both people and society.
Example:
United States GDP decreased for consecutive four years i.e the Great Recession of 2008–2009. And this recession resulted in the loss of many of jobs, decline of property values, decline in consumer and business spending. This led to a chain reaction that made other businesses struggle or fail, which made the problem worse. The unemployment rate increased over this period as well, pointing at 10% from 4.7%. Many factors resulted in this recession such as the financial crisis and the collapse of the housing market.
When did India's initial recession occur?
India had its first recession in the year 1991. India was experiencing a balance of payments crisis, that was brought on by a number of elements including the significant external debt, substantial budget deficits, and declining the foreign exchange reserves. The Indian government was helpless and was compelled to ask for a loan to the International Monetary Fund in order to maintain the health of the Indian economy (IMF). The government then designed a new structural adjustment measures, including depreciating the rupee, liberalizing trade and investment, and cutting back on expenditure, in order to obtain the loan. And because of these measures, the growth of GDP decreased from 5.2% -0.2% in 1991–1992, causing a recession. The Indian economy underwent important economic changes as a result of this crisis, which helped to liberalize and expand the market and, in turn, sparked economic recovery in the years that followed.
Can India expect a recession?
It is absolutely difficult to predict with exactly whether there will be a recession or not in India or any other country. Variety of factors such as GDP growth rates, inflation, employment levels, and consumer spending can still be used to measure Economic conditions. The corona epidemic has had an adverse effect on Indian economy, and India experienced a recession in 2020–2021. In addition to the losses in employment and a severe reduction in economic activity, the pandemic has also resulted in lower consumer and company expenditure. India's GDP shrank by 23.9% in the first quarter i.e. April–June of 2020–2021. Though the Indian economy has started showing signs of growth, it is still not clear how the industry will be going forward. Recessions are a part of the economic cycle and occur in any economy, it is vital to keep that in mind. Also, it's critical to remember that government's initiatives and policies may significantly affect the economy and decrease the consequences of a recession.
Why did Narayan Rane, Minister of Micro, Small and Medium Enterprises forecast an Indian recession?
It's crucial to take note of what Rane stated in this situation-
1. "We can state that there is an economic slump in major nations because we have access to some information since I am a member of the Cabinet and because of PM Modi ji's counsel. It is a truth."
2. "To prevent (the economic downturn), which is anticipated to begin after June, or to make sure India is not harmed... The government of Modi ji and the Center are working to prevent the slowdown from having an impact on the populace."
3. "The goal is to go up to fifth place by 2030, and India's growth is on the right track. It was previously ranked 10th in the world in terms of economic standing."
Will IT industry be worst hit by the recession in 2023?
Since the particular variables that cause a recession and the industries that are affected might change, it is hard to say with certainty which industry will be most impacted by one in 2023. But, typically, businesses that rely on consumer spending, including retail, lodging, and tourism, are more vulnerable during a recession. A recession can also have an impact on industries that depend on investment and finance, such real estate and construction.
It's also important to note that "defensive" industries like healthcare, utilities, and consumer staples typically fare better during recessions since they are still viewed as necessary and in demand.
Conclusion-
INDIA WILL NOT FACE RECESSION BY MAY ON LARGE SCALE.
India will need to see a contraction in both the January to March quarter and the April to June quarter of 2022 for the country to enter a recession after June. This is almost impossible as of January.
A recession is generally ruled out despite the fact that India's economic momentum is slowing — according to the First Advance Estimates of GDP for the current financial year that ends in March, the GDP is estimated to rise at just around 4% in the January to March quarter.
