7.28 ndian onom
(i) Direct and indirect taxes should be cut a possibility of depression with a zero per cent rate
down, so that the consumers have higher of inflation.85 Although this did not happen.86
disposable incomes (income after paying
direct tax, i.e., income tax) on the one groWth recessIon
hand and the goods should become An expression coined by economists to describe an
cheaper on the other hand, thus there is economy that is growing at such a slow pace that
hope that the demand might pick up. more jobs are being lost than are being added. The
(ii) The burden of direct taxes, especially the lack of job creation makes it “feel” as if the economy
income tax, dividend tax, interest tax are is in a recession, even though the economy is still
slashed to enhance the disposable income advancing. Many economists believe that between
(i.e, income after direct tax payment)— 2002 and 2003, the United States’ economy was
in a phase of growth recession. In fact, at several
(iii) Salaries and wages should be revised by
points over the past 25 years the U.S. economy is
the government to encourage general
said to have experienced a growth recession. That
spending by the consumers (as the
is, in spite of gains in real GDP, job growth was
Government of India implemented either non-existent or was being destroyed at a
the recommendations of the fifth pay faster rate than new jobs were being added.
commission without much deliberation Experts have revived this term in the wake of
in 1996–97). the ongoing financial crises in the Euro-American
(iv) Indirect taxes such as custom duty, excise economies since 2008. The situation is better
duty (cenvat), sales tax, etc., should be described by the term ‘double-dip recession’.
cut down so that produced goods reach
the market at cheaper prices. douBle-dIp recessIon
(v) The government usually goes on to follow The concept of ‘recession’ in the USA and
a cheap money supply policy by slashing Euro Zone is quite precise and technical—‘two
down interest rates across the board and consecutive quarters of falling GDP’—is how it
the lending procedure is also liberalised. is defined in these economies. And the idea of
(vi) Tax breaks are announced for new the ‘double-dip recession’ is an extension of it.
investments in the productive areas, etc. A double-dip recession refers to a recession
followed by a short-lived recovery, followed by
All the above-given measures were taken up by
the United Front Government in 1996–97 to pull 85. It should be noted here that as an impact of recession
the economy out of the menace of the recession.84 the rate of inflation (at WPI) had been falling down
throughout the mid fiscal finally to the level of
The forthcoming government took several other 0.5 per cent for a fortnight (Economic Survey, 1998–99,
such measures by the end of 1998–99 onwards GoI, N. Delhi).
(the NDA Government). Ultimately, the measures 86. The literature of Economics and the empirical world
experiences suggest that the phase of recession has all
taken up by the governments accompanied by the symptoms of depression except one. Every thing
a general recovery in the world economy, the being the same till producers are cutting the labour by
force ‘involuntarily (i.e. forced labour cut) it is the
Indian economy started recovering from the bout starting of depression—to be competitive in the market
of recession. Many experts had already predicted every producer starts forced la our cuts ultimately
putting the economy into the grip of a full grown
84. Economic Survey, 1996–97, MoF, GoI, N. Delhi. depression.