Recession... ! Really... !?

The US economy is in deep trouble.

The US government debt has increased.

The local consumers there are bankrupt.

The largest financial companies have gone bankrupt.

The largest auto manufacturers and airlines are on the verge of bankruptcy.

The US economy is probably already in recession - the statisticians will figure that out one of these days.

By the way - many people use the word "recession" without really knowing what it means. A rule of thumb is that a "recession" occurs when an economy slips backward. In reverse gear.

For two successive quarters.

So, when India’s GDP declines from a +8% rate of growth to a +7% rate of growth - that is not a "recession". The growth rates are still positive. If India’s GDP slipped into a negative rate of growth at, say, -2% for the quarter ended December, 2008 and then again slipped by -1% for the quarter ended March 2009 - then one can say that India is in a "recession".

A slow down in GDP - but still a positive rate of growth is not a "recession". It is a slow down.

But people like to fool you - to show you how smart they are.

So they use the very serious word: "recession".

The Indian economy has grown by an average rate of 6.2% every year since 1980.

For 28 years.

From 2004, we grew at 8.4% per annum.

The recent economic turmoil in the world will see our growth slow to a 6% to 7% range.

If expected rates of growth in GDP were the sole reason to invest in a stock market, India would be one of the better markets in the world to invest in.