Economic slowdown may be structural, not cyclical. It calls for removal of long-term reform | The Indian Express

Economic slowdown may be structural, not cyclical. It calls for removal of long-term reform | The Indian Express

Written by Amartya Lahiri |Updated: October 12, 2019 1:54:07 pm

The writer is professor of economics, Royal Bank research professor and Johal Chair, University of British Columbia, Canada

Economic slowdown may be structural, not cyclical. It calls for removal of long-term reform

The government would also do well to revisit the appointments process to key technical and regulatory bodies. Functions like monetary policy, banking supervision, data collection and dissemination, audit of government financial accounts, are all technical jobs.

Most of the growth between 2014 and 2017 was sparked by a sharp increase in government spending.

It is by now clear that India is in the middle of a sharp growth slowdown. The debate surrounding the slowdown is whether it is a cyclical downturn or a structural correction. Diagnosing the problem is key for devising policy responses. Cyclical slowdowns can be dealt with using temporary fiscal and monetary stimulus. Structural problems, on the other hand, require long-run policy responses.