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ELECTION 2018
ECONOMY
India’s Great Slowdown: What
Happened? What’s The Way Out?
By Arvind Subramanian and Josh Felman, Fellows of Harvard College
he Center for International Development ment goods is falling. Indicators of exports, imports,
at Harvard University in their recent study and government revenues are all close to negative
have found out that “seemingly suddenly, territory.
TIndia’s economy has taken ill.” The Havard These indicators suggest the economy’s illness
University scholars say that “It is India’s Great Slow- is severe, unusually so. In fact, if one compares the
down, where the economy seems headed for the indicators for the first seven months of this year
intensive care unit”. with two previous episodes, the current slowdown
Official numbers are worrisome enough, show- seems closer to the 1991 slowdown than the 2000-02
ing that growth slowed in the second quarter of this recession.
fiscal year to just 4.5 percent, the worst for a long Electricity generation figures suggest an even grim-
time. But the disaggregated data are even more dis- mer diagnosis: growth is feeble, worse than it was in
tressing. The growth of consumer goods production 1991 or indeed at any other point in the past three
has virtually ground to a halt; production of invest- decades. Clearly, this is not an ordinary slowdown. It
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