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Rathin Roy, Director of the National Institute of Public Finance and Policy, interviewed by Puja Mehra (The Hindu)

-The Hindu

The slowdown is an outcome of supply-side constraints, says the economist

The official GDP growth estimate for the July-September quarter, at 4.5%, is the lowest in 26 quarters. Rathin Roy, Director of the National Institute of Public Finance and Policy, and former member of the Prime Minister’s Economic Advisory Council, discusses the causes of the economy’s troubles and suggests possible remedies. Edited excerpts:

* The Finance Minister says the economy is not in recession. According to the latest official estimates, GVA growth in the first and second quarters of this financial year were 0.6% and -1.0%. Going by the technical definition, isn’t manufacturing very close to being in recession?

It’s definitely close to being in recession but for different reasons. Measuring recession in terms of negative growth in two quarters is a developed countries concept. It applies when economies are in a steady state and recession is a departure from the steady state. [A state of fully tapped land and capital so that growth is possible in case of improvements in technology and productivity, as happens in developed economies. In developing economies, growth is possible by increasing use of resources.] The Finance Minister is correct that in terms of conventional economics this is a slowdown, not a recession.

The Hindu, 4 December, 2019, please click here to read the entire interview.
 
Image Courtesy: The Hindu