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Recession in India. How Safe is our country?

Bloomberg Economists conducted a survey that shows India has zero possibility of witnessing a recession. Even though the economy might be impacted by fluctuating global conditions, India will still manage to grow 6-7% by the year 2023-24. But what makes India recession-proof? This article discusses the intricate details that make India less prone to the impact of a recession as compared to other economies. 

Factors that Make India Recession Proof

factors that make India recession proof

While India is not completely recession-proof, the factors mentioned below do make it relatively resilient to economic downturns. However, there are still challenges that need to be addressed to ensure sustained economic growth, such as improving infrastructure, addressing labor market rigidities, and increasing agricultural productivity.

  • Large Domestic Market

As per a report by the World Bank, the economy of India is highly buoyant from global impacts. This can be mainly due to its large domestic market. Further, the report showcases that a 1% drop in growth of the US leads to a 0.4% decrease in India’s development; this percentage is 1.5 times more in other evolving economies. 

India’s huge population creates a large domestic market, which is important for economic growth. This means that even if the global economy is facing a downturn, the Indian economy can still continue to grow based on its domestic consumption. 

  • Lower Dependence on Exports

As compared to other economies, India has a large number of holdings of international reserves which makes its dependence on exports less. Exports make up approximately 20% of India’s GDP, which is significantly less than other major economies. This lower dependence on exports means that India is less affected by global economic shocks and can have its domestic market to rely on for growth.

  • Diversified Economy 

India has a diverse economy with a mix of agriculture, manufacturing, and services. This diversity helps to insulate the economy from the impact of any one sector facing a downturn. For instance, during the COVID-19 pandemic, while the service sector suffered, the agriculture and manufacturing sectors remained resilient. This diversity of sectors also helps to create employment opportunities for a wide range of skill sets, which in turn strengthens the overall economy.

  • Strong Financial Sector 

 The RBI’s gradual withdrawal of accommodative monetary policies played a crucial role in managing inflation and promoting economic growth simultaneously. The vibrant capital market, a solid banking system, and an evolving insurance sector combine and form the strong financial sector of India. 

  • Government Initiatives 

Many policies and government initiatives have primarily impacted the Indian economy. Policy measures like the new National Reconstruction Company Ltd. and the new Insolvency and Bankruptcy Code were launched with the aim of solidifying the financial sector of the country. Moreover,  initiatives like “Make in India” and “Digital India” aim to boost manufacturing and technology industries, respectively, and attract foreign investment. The Goods and Services Tax (GST) introduced in 2017 aimed to simplify the tax system and reduce corruption. The government has also launched several schemes to support small businesses and startups, which are important drivers of economic growth.

  • Growing Technological Advancements 

India being resilience to economic downturns is a result of its growing technological capabilities. The technology industry in India has been growing rapidly over the past few years and has become a global hub for IT and business process outsourcing. One of the key factors contributing to India’s success in the technology sector is its large pool of skilled workers in areas such as software development, engineering, and data analytics. Many of these workers are well-educated and trained, with a strong emphasis on science, technology, engineering, and mathematics (STEM) fields. Additionally, India’s technology industry is known for its cost-effective labor, which has made it an attractive destination for businesses seeking high-quality talent at a lower cost.


Like any other country, India is not completely safe from recession. However, over the years, the country has shown remarkable resilience when it comes to economic challenges. From the financial crisis of 2008 to the covid-19 pandemic, India has managed to bounce back even stronger. 

In conclusion, India’s ability to withstand economic challenges can be attributed to its diversified economy, strong domestic consumption, and government policies aimed at promoting growth. While the country is not entirely immune to the effects of a global recession, its inherent strengths and ongoing efforts to bolster its economy make it a promising player in the international market. If you wish to learn more about the recession or how it may or may not impact the Indian economy, you can head over to the Bhive Alts website.



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