Policymakers should not need an external crisis to purposefully refocus attention on the economy and jump-start reforms
There is an emerging narrative in international commentary that India is now gripped by an impending economic crisis. This will only accelerate given the current woes at Yes Bank. The doyen of this nascent conventional wisdom is Arvind Subramanian, India’s former chief economic adviser and currently visiting lecturer at Harvard’s Kennedy School, who has dubbed the current downturn the “Great Slowdown". In a December 2019 working paper, co-authored with Josh Felman, Subramanian has gone so far as to suggest the present situation more closely resembles the lead-up to the 1991 crisis than the recession in 2000-02. The authors point to sharp contractions in key domestic macroeconomic variables, including investment, corporate profits, government consumption, direct taxes, consumer production, total credit, exports, imports, and, of course, gross domestic product (GDP).