 As you can see from the title of my presentation, what I'm trying to suggest is that instead of facing a slowdown, which started relatively recently, what the Indian economy may be facing is the end of the road for a particular growth trajectory, which was based on a specific kind of integration with the global economy and on cheap labour and a process of increasing inequality in the distribution of income. The reasons why I suggest this possibility is that firstly, as regards goats itself, there is a very plausible case that what we are seeing is not just a slowdown, but a process of a new phase or a new stage in a successive deceleration of Indian growth, which began a long time ago. The immediate kind of scenario that we have is this, that in the last five quarters, successively the quarterly GDP growth rate relative to the same quarter in the previous year has been falling and as Meenakethan mentioned, at 5% it is the lowest in the last 25 quarters. But as all of you know, the new GDP series itself has been, on which this is based, has been a controversial one. And the controversies relate not merely to how accurately it is measuring growth in the Indian economy since 2011-12, which is the base year of the new GDP series, but also relate to what were the growth rates of the Indian economy in the previous decade if they were to be measured on the basis of the same method as is applied in this new series. So one picture of what has happened in the Indian economy in the last two decades is what is suggested by the blue curve here, okay. Now this is the GDP growth rates based on the new GDP series and one back series estimate, which is the official back series estimate that the central statistical organization came up with. Now if you look at that particular curve, you see that it means that in the previous decade, which is when we saw Indian growth rates climbing to levels which were unprecedented in India's history, from about 2003 onwards you had this massive jump in the Indian growth rates, that jump A was not as much as the old GDP series showed. And if you look at since the period since then, there was a small dip at the time of the global crisis, which is the first one, and a short dip again at the beginning of this decade, but otherwise roughly you have remained along the same kind of growth levels through this, through the two decades of this century, okay. And you can see that the red one is the old GDP series and therefore the slowdown at the beginning of this decade, which the old GDP series had been suggesting was A not as much and certainly didn't last beyond the first one or two years. But even in this new GDP series if you see that the recovery after that slowdown at the beginning of the decade, there is a dip that you see in the last two years, which is basically the post demonetization and the introduction of GST series. So even the new GDP series is suggesting that post demonetization and after the introduction of GST, there is some slippage in the growth rate. And this slippage, mind you, could be more than what you are seeing because the exceptional adverse effects of demonetization and GST on the unorganized sector of the economy. Our methods of GDP estimation were never designed to capture any such exceptional adverse effect. So we may be overestimating the unorganized sector growth rate in any case. So even the post demonetization growth rates may be a little lower. But there's a different picture that you can get of this century from this, which is, again, the blue line is the, the blue curve is the old 2004-5 base year series. The red one on top is the back series estimate made by the Committee on Real Static, Sector Statistics constituted by the National Statistical Commission. It's that back series that had was discarded. And a few months later at the behest of the Niti Ayog, a new back series which lowered the growth rate of the past was issued. Now, so that series showed that, okay, whether you use the new method of the old, the previous decades growth rates were similar. But the last one, the dashed line, is the previous chief economic advisers estimate what was the actual GDP growth rate before demonetization up to 2016-17 in this decade, based on the views expressed by so many since the new series was introduced, which said that the new series was overestimating Indian growth. Now, if this picture is correct, then what you get is a scenario from eight to nine percent, you drop to about four and a half percent or maximum five percent at the beginning of this decade. And dropped even further from that after demonetization and GST. And what you're seeing today is a slide from that. Therefore, you may have actually be experiencing a new phase in a successive process of deceleration, not a new phenomena that you're seeing today. That's the first part of my argument. The second is that if you look at the details of the growth process of the previous decade in the new, including if you use the new GDP series, you find that there are several differences between what happened in the previous decade and what is happening in this current one. One of the important differences is the exceptional slowdown in the industrial sector. The GNU GDP series doesn't measure that accurately, as you can see, from the last column. But if you see the index of industrial production, which has the same base here as the new GDP series, then you see that consistently industrial growth rates have been extremely low throughout this decade and to put it in a longer term perspective. Since the 1980, in the four decades since 1980, this is the worst decade as far as industrial growth is concerned. And 1980 was, of course, marked the revival from the stagnation that set in after the mid-1960s. So this current decade, if you go by the index of industrial production, is one of the worst decades of industrial performance in independent India's history. If you look at the composition of that growth in terms of the expenditure that is there on GDP, there too you find that there are very important differences between the previous decade and the current one. Irrespective of what GDP series you are using, this can be demonstrated. So this particular graph is based on the new GDP series and the back series issued by the CSO based on this new method. So even the Nithya Ayoga or the CSO would have no objection to this particular data. Now if you see this is a comparison between two seven-year periods, 2004-5 to 2011-12, because 2004-5 is the first year of the back series that has been issued. And 2011-12 to 2018-19, so two periods of equal duration. And if you start from the beginning of the first year of that period and give it a figure of 100 and see how it moves over the same period, this is the comparison that is being shown here. So if you see the last two, which is comparing period one and period two, in terms of the movement of GDP as I indicated earlier, it looks as if almost the same path is being followed after 2011-12 as was there in the previous decade. If you look at the first comparison, which is the consumption expenditure on this GDP, again it looks very similar when you compare the previous decade and the current one. But and if you look at government consumption expenditure, also roughly similar to what was there in the previous decade. But as soon as you look at capital formation or investment and trade, you find that there is a very dramatic difference between what was happening in the previous decade and what is happening in the present one. There is a great slowdown in the rate of growth of investment and an almost complete collapse of Indian trade. Both exports and imports have growth have been virtually zero in this particular decade. So trade as well as investment, both collapse in this particular decade and this is the story for the decade. This is not something that has happened yesterday. This is a very important difference between the previous and the current decade. If you look at the same comparison with the old GDP series for the previous decade and the new, it's a slightly different comparison, you see the same story. So essentially in the previous decade, you had a process where trade was expanding, investment was growing very rapidly, consumption expenditure was also growing and your growth was based on all of these together. This particular decade, two important components, investment and trade, have ceased to be drivers of your growth process. It's mainly been on the basis of consumption. Now, all economic theory would tell us that that's a pretty unsustainable process of economic expansion because consumption cannot easily sustain on its own. Now, the story of investment has two parts. One part is, of course, if you stick to the economics, no fixed capital formation has two parts, construction and machinery and equipment. So either you spend on construction or you spend on machinery and equipment. So construction can be both of productive capacities, if a creation of productive capacities or real estate. Both of them were part of the previous decade of expansion. So if you see, again, it's a comparison between the previous decade and the first, assuming both are starting from 100. So the red line, red curve, is this decade story. And the two different periods of the previous decade based on either the 2004-5 BCR series or the new back series showed you what is the picture for the previous decade. And you can see this huge difference between the construction activity was growing in the previous decade and what has happened in this decade. If you look at the other part of fixed capital formation, which is expenditure on machinery and equipment, what you have is, again, previous decade, the growth of capital goods production in response to this increasing investment was very rapid. This particular decade, it's been almost flat, almost zero growth in capital goods production over the entire decade. If you look at imports, that has, in fact, collapsed and stagnated in the present decade. So all indicators confirm the fact of a slowdown, very sharp slowdown in the investment and real estate boom which were characteristic of the previous decade, particularly the period before the global crisis. So the investment ratio in the economy, therefore, has been actually consistently falling for almost a decade. And the same thing you see with regard to trade. So the relative importance of trade and investment to your GDP have been falling in this particular decade, whereas they were very sharply increasing in the previous decade. So some transition has happened long before this current slowdown set in, which needs to be taken note of. The other indicator of the fact that, so, investment and exports particularly are also item of expenditure. They generate demand for what is produced. The other indicator of a slowdown in expenditure growth or demand growth in the Indian economy from the beginning of this decade is what has happened to bank credit. Bank credit, again, grew very rapidly in the previous decade, much faster than GDP. So you can see the very sharp rise in the bank credit to GDP ratio. But in this particular decade, as GDP growth rate has slowed down, bank credit growth rate has also slowed down to levels which are more or less the same as the GDP growth rate. So bank credit growth has also been very slow throughout this particular decade. Now, we know that this growth, even when it was happening, was something that was accompanied by extremely sharpening increases in the levels of inequality in the distribution of income in India. This is Piketty and Chancellor's estimates. You can see the top 10% goes up in the period after 1980 and 1990 in particular. The next 40% comes down, and so does the bottom 50% of the population. So it's a growth process in which 10%, the top 10% has been seeing an increase in its share. The remaining 90% have been sliding, okay? And this remaining 90% basically is caught up in largely in a situation where either you're in agriculture and cannot extract an income out of it, reasonable income out of it, or you are unemployed or in unpaid employment, or you are under-employed, and even when you are employed in exceptionally productive activities, what you receive in return for your labor is extremely less because you have an overall situation where relative to the employment opportunities available, the number of people seeking work is very large. And what is the extent of this effect of this is indicated by this set of figures which give you an idea of what 90% of Indians have to live with. And these are all recent figures from three different sources, which all tell you the same story. And they are contemporary figures, so you don't have to convert into what would they mean at current prices or not. You can see that top 10% per adult income in close to a lakh. And the remaining 90%, 12,000, and the bottom 50%, 5,000. And the top 1% is even higher than that. So if this has been the nature of your growth process, what does it mean? So you've had a growth process in which large number of people are stuck in a situation where they simply cannot extract they will not simply be able to generate a reasonable growth in their incomes and are stuck at extremely low levels of income. Even if they manage to get employed in activities which generate a high quantum of value added, the share that they will receive of that is low and steadily falling. Which means that as long as such a growth process takes place, you will get a process where those who are, who have assets, those who hire these labour services at extremely low rates, though you use these labour services which are offered at extremely cheap prices can benefit from that particular growth. But of course that's a growth which is also then dependent on those who are gaining sustaining increases in their expenditures which are proportionate to that increase in production that is happening. This expenditure increase is partly on consumption and we've seen of course consumption standards of a section of the Indian population go up tremendously in the last two to three decades. But there is an increasing part of that which is also an expenditure on assets whether productive or unproductive. And that expenditure on assets whether productive or unproductive can be sustained only if between the consumption expenditure, exports and whatever is the return generated from this expenditure on assets there is a sufficient amount of demand generated to allow those assets to deliver a return. So we saw in the previous decade the effects of this process and the rapid growth of the previous decade, a decade in which income inequality also increased faster than perhaps they've ever done in the history of the Indian economy. So the income inequality increases in the previous decade the levels of wage stagnation in the previous decade when you compare them with the rates of growth of the economy that gap is probably the widest that we have ever seen in the history of the Indian economy. But that meant that this process was which had to be spurred by the return being offered primarily on the basis of suppressing the share of labour or wages which itself has certain limits. Changes in the global economy where international demand levels were not sufficient to sustain the kind of export growth that we saw in the previous decade meant that this particular process of expansion was not sustainable. And we saw at the beginning of this decade itself two of those components exports as well as investment growth collapsing. That process had already set in we were unaware of the extent of the effects of that because of the new GDP series but on the top of that particular process that we saw in the previous in the first half of this decade you add the effects of demonetization GST and the disruptive effects it has had and you see a further undoing of that particular process whose spread in my view is what we are witnessing today. So today we are witnessing a spread of the crisis to a level where every sector of the economy including the beneficiaries of the rapid growth of the previous decade the inability to sustain that particular process of them too which is that the way in which people made money in the past is no longer appearing to be feasible that's the point we perhaps have reached today in which case in that sense we may be reaching the end of the road for a particular growth course of growth that we have had. Of course if you have to address this question the one thing that could have made a difference would be of course if you had some form of redistribution or radical forms of redistribution of asset redistribution or of course not on the agenda have not been on the agenda at all but even the more minimalist redistribution that could have been possible with use of fiscal policy has not been something that has been possible in this particular decade we moved from the fiscal stimulus of the post-global crisis period to a process of fiscal consolidation. So 2011-12 the beginning of this decade is also the beginning of the process of fiscal consolidation which is what has resulted in the fiscal deficit this is just for central government but illustrates the point which is the bottom graph that fiscal deficit coming down as a proportion of GDP consistently through the decade but how has it been brought down is the one on top which tells you how it has been brought down which is the what the government does is a proportion of the total expenditure this is the total expenditure inclusive of the work that is transferred to the states and the states spend that money state government spend that money so that is something that has been brought down as far as taxes are concerned part of the stimulus was the cuts in taxes what we have seen is that if you exclude for that short period in which you benefit from reduction in international prices by raising excise duties on oil if you exclude that part and the GST compensation which is basically levied to compensate states for their revenue loss if you exclude that what you find is that the entire decade there is absolute neural recovery of the tax to GDP ratio and our taxes are dominated by indirect taxes which are regressive in nature so fiscal policy has also been working in a direction of squeezing demand and of increasing rather than redressing the inequalities that the growth process of the Indian economy were tending to generate and therefore this particular possible antidote to the effects of highly unequal growth process have also not been at work and now we are in a situation where the fiscal crisis is widening because the slowdown in growth is inversely affecting revenues and all that the government of India can think of is how to cut expenditures in order to ensure that that particular target of the fiscal deficit is still maintained if that is going to be the approach it doesn't seem that there would be any easy or short or quick resolution of this particular slowdown. Thank you.