India’s Recession Phase- a Review

Abstract

India’s growth rate picked up from 4% during (pre-reform period) to 9 % during the first decade of this century (2001-10). Earlier India was affected less by external world depressions as it relied more on internal consumption, saving and import substitutions. However, after reforms picked up, its economy was opened to global players, share of exports, both goods and services, in GDP grew significantly. There is a consensus among economists that every economic expansion is followed by recession. During the boom, when economic growth is too fast and unsustainable, inflation increases. To reduce it, the governments deflate the economy by various ways which result into credit crunch and falling prices. Cost push inflation squeezes incomes and reduces disposable income. This causes a collapse in confidence of finance sector and 'real economy'. Indian economy also passed through these stages during  2008-12. The economic growth rate was above 8% for consecutive period of three years since 2006. However by the time it reached 2012 the GDP growth rate fell to 5% approximately. This paper is an attempt to explore the reasons for India’s recent fall of growth in GDP.by exploring pre-reforms and post-reforms scenario analysing the data from April, 1971- March 2012 (in short 1971 to 2011),and by examining short term quarterly data from 2008 to 2012 to explore affected sectors.