How Recession is different from Slowdown ,India efforts to boost the growth

An economic recession signifies a drop in the gross domestic product (GDP), while a slowdown is merely a decline in the growth rate of the GDP. 

It’s the difference between a salary cut and a smaller increment. While one reduces an individual’s actual income, the other is merely a drop in the growth of that income. A slowdown usually precedes recession, but does not necessarily lead to one.

RECESSION:

The GDP is the total value of all the goods and services produced or created in a country in a year. When this value falls, the country’s economy is said to be in recession. It means that the country is producing and earning less than what it did, say, six months ago.

An economic recession is marked by low consumer spending because people lose confidence in the growth of the economy. This decrease in the demand for goods and services, in turn, leads to a decrease in production as companies reduce the output to match the demand. This also leads to lay-offs and a rise in unemployment, as is being witnessed all over the world.

However, a one-off decline in the GDP does not mean that the economy has slipped into recession. The GDP must decline for two consecutive quarters for it to be called recession. Currently, several countries are facing one. 

SLOWDOWN

A slowdown, on the other hand, means that the pace of the GDP growth has decreased. Countries like India and China are currently faced with an economic slowdown. It means the production and earnings of these economies are not growing at the same pace as, say, last year.

An economic downturn is normal after sixseven years of fast-paced growth. The Chinese economy, which has grown at a scorching pace in the past few years, is expected to slow down to 9.5% in 2008, the slowest in seven years. Next year, it may slip to 7.4%. 

As far as the Indian economy is concerned, recession is still a far cry though economists feel that the slowdown may continue for another three or four quarters.

GLOBAL IMPACT

When large economies such as the US, the Eurozone and Japan go into recession, it has a worldwide impact. The countries that depend on these economies to buy their products and services are the worst hit. As Indian software companies have major clients in the US and in the Eurozone, they will see their top lines shrink as their clients cut down on expenses due to the recession

What are the steps taken by India to boost the growth? 

According to finance minister, steps taken by the government in the past few months to pull the economy out from a six-year low growth,  said the measures include corporate tax cuts to improve risk-return of companies.

Here's a list of all measure announcements that were made:

*Economic survey outlined a plan to make India $5 trillion economy with emphasis on driving up investment. On the consumption side, the government has taken steps to help the NBFCs and HFCs.

*The govt provided support to NBFCs/HFCs under the partial credit guarantee scheme. The govt sanctioned support for Rs 4.47 lakh crore to NBFCs & HFCs which includes Rs 1.29 lakh crore for pool buyout of assets.

*Within two days of cabinet approval, 17 proposals worth more than Rs 7,000 crore approved. Proposals worth Rs 20,000 crore will be approved over next two weeks under the partial credit guarantee scheme.

*On investment side, the government has taken steps to boost investment, support real estate, credit expansion, corporate tax and bank recapitalisation.

*To boost liquidity in the market, the government has cleared dues worth more than 60% of 32 CPSEs in the last two months.

*Under the new external benchmarking scheme announced by the RBI, more than 8 lakh or Rs 72,201 crore worth of loans sanctioned under the new regime till Nov 27.

*66% of Budgeted capex expenditure of Rs 3.38 lakh crore has been taken so far. Higher government capital expenditure allows crowding in of private investment. April-Nov capex of 32 CPSEs is at Rs 98,000 crore. Railway and road ministries will have undertaken capex of Rs 2.46 lakh crore by December 31. 

On investment side, the government has taken steps to boost investment, support real estate, credit expansion, corporate tax and bank recapitalisation. 

*To boost liquidity in the market, the government has cleared dues worth more than 60% of 32 CPSEs in the last two months. 

* Under the new external benchmarking scheme announced by the RBI, more than 8 lakh or Rs 72,201 crore worth of loans sanctioned under the new regime till Nov 27. 

*66% of Budgeted capex expenditure of Rs 3.38 lakh crore has been taken so far. Higher government capital expenditure allows crowding in of private investment. April-Nov capex of 32 CPSEs is at Rs 98,000 crore. Railway and road ministries will have undertaken capex of Rs 2.46 lakh crore by December 31, he said. 

*Rs 60,314 crore of capital has been infused into PSU banks. Lenders have disbursed Rs 2.2 lakh crore to corporates and Rs 72,985 crore to MSMEs. 

*FDI inflows of $35-billion in first half of FY20 vs $31 billion in the same period last year has been achieved. 

*Rs 1.57 lakh cr tax refunded this yr vs Rs 1.23 lakh cr last yr: Revenue Secretary. The step will boost consumption in economy. Income tax refund up 27% so far in FY20. 

*Realty fund of Rs 25,000 crore has been created for last mile funding for stalled projects. Necessary changes in IBC made to allow projects facing insolvency to avail funds under scheme. 

*Unified regulator for international financial services enable capital flow without any hurdles. 

*Important changes in IBC: Ringfencing successful bidders of stressed assets from prosecution.