Asit Ranjan Mishra: Finance Minister Nirmala Sitharaman indicated on Tuesday that India’s GDP contraction could be reduced to almost zero in fiscal year 21 if India’s current economic revival remains sustainable in the second half of the financial year.
“We can see the reactivation now, particularly in the PMI (purchasing managers index) which shows a rebound in the number, the highest after 2012, which in itself indicates that the reactivation is there, that it will be a constant reactivation. and sustainable. If that sustainable reactivation is going to occur between the third and fourth quarters, we expect overall GDP growth despite the pandemic to be something the IMF has predicted negative or close to zero this time. Next year will see India very clearly as one of the fastest growing economies, “Sitharaman said while speaking at the India Energy Forum.
India’s economy contracted 23.9% in the June quarter following the national shutdown to slow the spread of the coronavirus pandemic. However, following the unlocking of the economy starting in June, India’s manufacturing PMI expanded to its highest level in over eight and a half years at 56.8 in September supported by faster increases in new export orders and domestic sales. , indicating a more rapid change in industrial activity. The Reserve Bank of India and the International Monetary Fund have estimated that the Indian economy will contract by 9.5% and 10.3% respectively in fiscal year 21.
EY India in its macro report released on Tuesday said that for the entire fiscal year 21, India faces an uphill task to achieve a positive real GDP growth rate. “A large number of rating agencies and multilateral organizations have forecast India’s annual growth in fiscal year 21 and, in some cases, have also provided the quarterly breakdown. None of the forecasters included here show positive real GDP growth. The better performance is reflected in the RBI’s Survey of Professional Tipsters at (-) 5.8%, “he added.
Justifying the strict blockade established in March, Sitharaman said the government wanted to prioritize lives over livelihoods. “We wanted to make sure that preparatory work is done to address the pandemic. The entire facility for the affected pandemic should be ready before the economy unlocks, “he added.
Further backing up his optimism about the recovery of growth, Sitharaman said that economic indicators show that the agricultural sector related to the primary sector and the rural sector are performing very well as a result of which the demand for durable goods, agricultural equipment such as tractors and vehicles is increasing. . “The festival season has started in India as a result of which I hope that the demand will increase and therefore also be sustainable,” he added.
Sitharaman said the government is placing the highest priority on building infrastructure for sustainable economic recovery. “Public spending on infrastructure from both the union government and the state governments, for which funds will also come through FDI. Many of the areas we have marked are already listed in the National Infrastructure Pipeline document that was casually released in December 2019, long before the pandemic hit us, “he added.
Sitharaman said the government is also focusing on agriculture and related activities such as food processing, export of agricultural products, while building cold chains and port connectivity to ensure that “surplus grains, fruits and vegetables from India are intact and fresh to be exported. “
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