Recession
A significant, broad-based decline in economic activity lasting more than a few months.
How it is identified
Common working test: two consecutive quarters of negative real GDP growth
Unit
qualitative
In depth
The two-quarter rule is a convenient shorthand rather than an official definition — in the United States the NBER dates recessions using employment, income, production and sales together, and India has no equivalent official arbiter. Because GDP data is published with a lag and revised afterwards, a recession is usually confirmed only after it has begun and sometimes after it has ended. Equity markets typically fall before one and bottom before it ends, which is why waiting for confirmation is unhelpful for investment decisions. India has rarely experienced technical recession, with the pandemic quarters being the notable exception.
Worked example
Two quarters of minus 0.4% and minus 0.6% growth meet the technical test. The data confirming the second quarter arrives roughly two months after it ends, by which time the market has usually already moved.
Illustrative figures, chosen so the arithmetic is easy to follow. Not a live price and not a valuation of any company.
Educational reference only
This entry explains what “Recession” means. It is not investment advice and not a recommendation to buy or sell any security. Any numbers above are illustrative, not live prices, and nothing here predicts price direction or rates a stock. Consider your own circumstances and consult a SEBI-registered investment adviser before acting.