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.