Chennai: C.Rangarajan, former RBI governor on Tuesday said that the current state of the economy can be termed as 'slowdown' as there is a decline in Gross Domestic Product (GDP) growth rate.
The statement was given during a panel discussion at the Madras School of Economic on the Indian economy. Besides Rangarajan, the event was attended by NITI Aayog Vice-Chairman Rajiv Kumar.
Speaking to ETV Bharat, former RBI governor explained the difference between slow down and recession.
He said that the slowdown is a decline in GDP growth rate, while the recession is a decline in GDP. And, concluded that the current state of the economy is going through a slowdown.
Differing views
It was interesting to note that, while the former governor of the apex bank observed that the current slowdown is caused by structural as well as cyclical factors, whereas NITI Aayog Vice-chairman Rajiv Kumar said that current slowdown is cyclical in nature.
In the event, Rajiv Kumar emphasized on the need for achieving USD 5 trillion dollar economy by 2024. He said that keeping future needs in mind we need to achieve 12% nominal GDP growth rate per annum.
Explaining the main reasons behind the current economic situation Rajiv Kumar said, "surge in lending from 2004-2011 period is the reason for the current credit crunch in the economy and recent announcements by the Finance Minister Nirmala Sitharaman such as banks amalgamation will improve the situation."
On USD 5 trillion target, Rangarajan said the targets must be realistic.
It is to be mentioned that the Indian economy has registered it's slowest quarterly growth in the last six years. In April-June quarter of FY 2019-20, the GDP grew by 5.0% raising questions on the government's handling of the economy.
Read: Slowdown cyclical, FM's steps will improve economy: NITI Aayog Vice-Chairman
