Recession gives chills to spine to every person who depends on earning for bread and butter. Only the monks are free from this slippery fix of the economic recession. Is recession coming in india? are more tough days coming for us ? these are the few questions we don’t want to face right now. Lets start with an afresh perspective to understand the current economic situation of India or for that matter whole world.

What is a recession and how does it get detected?

So for the relief, there is no official definition of recession, it is basically a period of decline in economic activity which is prolonged in nature per say for 2 consecutive quarters of decline in a country’s real (inflation adjusted) gross domestic product (GDP)—the value of all goods and services a country produces called recession.

is recession coming in 2020 in India?

it would be really premature to say anything right now the answer for this question is yet to be answered by the economic data.

How does one can detect a recession ?

Recession mainly effects a countries economy by a decline in  trade,  rise in unemployment and shrinking GDP. An economy can show signs of weakening months before a recession begins, the process of determining whether a country is in a true recession (or not) often takes time. The recession detection process involves establishing a broad decline in economic activity over an extended period of time after compiling and sifting through many variables, which are often subject to revisions after their initial announcement. In addition, different measures of activity may exhibit conflicting behavior, making it difficult to identify whether the country is indeed suffering from a broad-based decline in economic activity.

Recession Indicator

There are a variety of factors that effects an economy, there are no best indicators to show recession, some are more widely accepted while determining the recession in an economy. following are the list of indicators which one should consider while determining whether there is a recession or just a little temporary slowdown.

  1. Employment Data :-  

  • Employment data of at least 2 to 3 quartes help us understand the job market trend of an Economy. A continuous decline in employment opportunity is real indicator of shrinking economy where government put their all efforts to create jobs but fall in trade, push back all those efforts. so lets understand this employment trend of past 10 years in India

Above graph shows a sharp decline in unemployment from 2016 to 2017 and then it gets stable. When we compare it with 2008’s recession data, its shows positivity as there is no continuous decline. India’s Population reached 1,332.00 million people in Mar 2019. The country’s Labour Force Participation Rate dropped to 51.81 % in Dec 2019, overall India is still in green zone and this slowdown in the employment market is temporary.

2. Yield Curve:-

  • A yield curve simply shows the interest rate on a bond, or Treasury. These Treasuries have differing lengths of duration, known as their maturity. Some bonds last one month; some last decades. The curve, therefore, compares how those interest rates change over time. lets see India’s yield curve over a period of time.

The India 10Y Government Bond has a 6.439% yield. Above yield curve shows positive growth of government bonds over a period of time so its a strong indication that the Indian economy is going strong and there is no strain on bond earning to investors.

3. Confidence Indexes 

  • Even in economics, it matters how people feel , It’s worth  following sentiment if you’re trying to predict what the economy will look like in the future.

RIB has issued a consumer index for year 2020 you can downlod a detailed version from here – RBI Consumer index

Current perception on the general economic situation, price levels and household income remained weak when compared with the position a year ago, the one year ahead expectations on employment, however, improved marginally over the previous round.

The current economic outlook seems uncertain at this point of time and it would require more time to decide whether we are going toward recession or its just a bumpy ride of the economy to settling down the economic reforms done by Narendra Modi Government in last 6 years.

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2 thoughts on “Is recession coming in India in 2020 a snapshot of Indian economy and recession indicators

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    Great job.

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