Interview section by Debashis Basu ,Founder ,Editor of moneylife .

Economy : This is as good as it gets

The growth of India’s Gross Domestic Product has dropped to just 4.5 per cent in the second quarter of this fiscal year  2019 .For the entire year ,growth will be  at the  best of 5 per cent . The common man is no wiser as to know how, despite being ruled by a Vikas Purush for more than five years, growth has crashed from 7.5 per cent .Well, official economic arguments are now available. Bibek Debroy, chairman of the prime Ministers Economics Advisory Council has written an interview  in  a open magazine ,explaining what are the reasons  for the slowdown of the economy . And here are some of his main arguments.


Question 1  : Hey ,we are still growing; be happy :


India  definitely   remains as  the fastest –growing countries in the world. Economic illiterates talk about the  recession without realizing that  real recession among the few things ,it is  precisely defined in the economics as, the GDP shrink age over two successive quarters. This is true but Mr Debroy misses the point of expectations vs reality. Did he honestly expect 5 per cent GDP growth after five years of the modi raj? or was it opposite ?


Question 2 : Inflation is low ,be happy :


Since GDP figures are adjusted for inflation with inflation around  3 per cent, nominal growth will be 8  per cent for the year . One of the major success of the government since 2014 has been lower inflation ,which we don’t seem to appreciate enough. Inflation hurts the poor more , he argues . We would have been far worse with 5 per cent real growth,10 per cent inflation, and nominal growth of 15 per cent ,he reminds us.


Question 3: Blame weak global trade , not the government :


At least 3 percentage points of GDP growth comes from  the exports ,argues Mr Debroy . If exports growth peters out ,we go down to 6 per cent  of the GDP growth . Three factors influence exports , accordingly to him and they are global demand, global supply ,and the exchange rate .The government cannot do anything about the first and very little about the first and very little about the third . As for supply , “the government has introduced measures to improve logistics”.Thats it , and so “net exports will continue to be a constraint”.