As NBFC crisis, liquidity crunch, rising unemployment and demand slowdown ring alarm bells, a veteran economist has said that the country is not in recession but witnessing a slowdown.
As NBFC crisis, liquidity crunch, rising unemployment and demand slowdown ring alarm bells, a veteran economist has said that the country is not in recession but witnessing a slowdown. “We may possibly be at the start of a structural slowdown,” economist Omkar Goswami said on CNBC TV-18 panel discussion, dissing claims of India entering a recession. Earlier yesterday, biscuits and confectionery major Parle Products also said that while the situation is severe, it won’t be right to call this a recession. “I would not say recession. It is too strong a word. I would call this slowdown. We are hopeful that this will not turn into a recession,” Mayank Shah, category head, Parle Products, told Financial Express Online. He added that the company is hopeful that sanity will prevail in the end and that the government will intervene in the situation to avoid snowballing of the ongoing slowdown into a recession.
However, the current state of the economy is not likely to take a turn for good any sooner. In the MPC minutes of the Reserve Bank of India’s August meeting on Thursday, RBI Governor Shaktikanta Das acknowledged to a further demand slowdown since the last MPC in July. He also said there is “clear evidence of domestic demand slowing down further,” adding that the priority remains to bolster dwindling domestic demand and support investment activity.
The slowdown in the Indian economy is evident from the auto sales slump and the sluggish demand crisis in the FMCG sector. Addressing the same, two FMCG majors — Britannia and Parle — have recently come out and said that the situation is so severe that people are thinking twice before buying even Rs 5 priced packs. The situation is dire for Parle Products which said that it may have to lay off 10,000 employees if the current condition pertaining slowdown and higher GST rate on biscuit category persists. He said that the biscuit industry is hit by a double whammy of demand slowdown, aggravated by rising product price due to high raw material costs.