Is global recession a good omen for India at large ?
Staff Correspondent
Mumbai: The whole world is horrified by the sound of global recession. The fear of recession in many developed countries including America is becoming frightening with every passing day. The International Monetary Fund (IMF) has cut its forecast for the US economy to 2.9 per cent. It says that the chances of survival of the world’s largest economy from recession are decreasing day by day.
But experts say that slowdown in developed countries like America can be beneficial for India. They argue that a recession in developed countries will reduce the prices of commodities around the world. This will help in dealing with inflation in India.
Citigroup Managing Director and its Chief Economist in India Samiran Chakraborty said in an interview with Bloomberg TV that India is a net importer of commodities. Therefore, from the slowdown in developed countries, India should get relief on the inflation front. But India will also face pressure due to the global slowdown. The reason for this is that it will affect exports and reduce economic growth. At present, the emphasis of the policy makers of the country is on controlling inflation. Therefore, it can be said that recession can be beneficial for India in some ways.
Hike in repo rate
The fear of recession is increasing all over the world. In order to control inflation, the central banks of countries around the world have increased the main interest rates. Inflation is at its peak due to the ongoing war between Russia and Ukraine and the withdrawal of relief measures taken during the epidemic. This is the reason why the central banks of many developed countries including America and Britain are increasing interest rates rapidly. RBI has also increased the interest rates by 90 percent for May.
Experts say that there may be more momentum in this. The reason for this is that inflation has remained at a level much higher than the limit set by the RBI. Chakraborty said that if inflation does not come under control, then the RBI can take the repo rate to 6 per cent.
RBI Deputy Governor Michael Patra had recently said that CPI inflation based on the Consumer Price Index is likely to remain above the RBI limits for the next three quarters. RBI has set a target range of two to six per cent for this.
