Financial Conditions Very Tight, Should Brace Ourselves for Economic Slowdown: Former CEA Arvind Subramanian
“The financial system is under stress, financial conditions are very tight. This is not conducive for rapid growth,” he said.
On Sunday, December 9, Arvind Subramanian, India’s former Chief Economic Adviser (CEA), reportedly warned that the Indian economy was headed for a period of slowdown.
At the launch of his book, Of Counsel: The Challenges of the Modi-Jaitley Economy, Subramanian said, “We have to brace ourselves for a slowdown for some time. I say that for a combination of reasons. First of all, the financial system is under stress, financial conditions are very tight. This is not conducive for rapid growth,” reported ET
Referring to global economic climate, Subramanian added, “Europe is slowing down, Japan is slowing down, there are political calendars. It is easier to do things at some moments than other moments. I think to expect huge reforms that will perk up the economy at this stage would be somewhat ambitious. For the combination of all these reasons I think we should brace ourselves for a period of slowdown. Then we have to see what policy actions are taken, how external environment changes, then we can think about real perk up in the economy.”
He also spoke about the recently released GDP back-series data, the veracity of which has been widely-questioned by economic experts. Subramanian said, “If you look at the other indicators during that period, you see a big difference between those indicators and the recent back-series. It demands an explanation,” reported ET.