Indian Economy – What next

first_imgThere is no question in anyone’s mind that the Indian Economy is struggling as evident from various available data. The question which everyone has in mind is when will the recovery start. Related to this question is whether the economy has seen the bottom or something more is left.My take on the above question is, one more quarter of negative news is expected and then the recovery will start. The reasons why I hold this view are:1.       Base effect will start and data will start showing a positive trend. This is an important factor, more psychologically than anything else. Once people start seeing positive trends, they will start spending (which they have been holding back given all the negativity). Number (data) is a very powerful tool and changes the way people think. Once the spending starts, aggregate demand in the economy will increase setting the path for recovery.2.       The steps taken by the government will start having a positive effect (there is always a lag effect).3.       Disruptions caused by demonetisation and GST will play out by that time.4.        Government hopefully will come out with some more big bang reforms especially on labour and land front which will give momentum to the growth.I am quite convinced the next growth cycle will be more pronounced and steep.last_img read more