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‘Indian economy may contract 25 percent in current fiscal year’ | India News

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NEW DELHI: The Indian economy is not recovering as fast as the government claims, and the country’s economy could contract 25 percent in the current financial year, economist Arun Kumar said on Sunday.
Kumar further said that due to a large drop in GDP during the current financial year, the budget estimates have been completely broken down and therefore there is a need to correct the Budget.
“India’s economic growth is not recovering as fast as the government shows because the unorganized sector has not started to recover and some important components of the service sector have not recovered.”
“My analysis shows that the growth rate will be (-) 25 percent in the current financial year because during the close (during April-May), only essential production was taking place and even in agriculture, there was no growth,” said. he told PTI in an interview.
The Reserve Bank of India (RBI) has projected that the Indian economy will contract 7.5 percent in the current financial year, while the National Statistical Office (NSO) estimates a contraction of 7.7 percent. .
In addition, according to the NSO, the Indian economy contracted 23.9 percent during the April-June 2020 quarter and recovered faster than expected in the July-September 2020 quarter as a rebound in the Manufacturing helped GDP register a lower contraction of 7.5 percent. penny.
Kumar, a former economics professor at JNU, said that the government’s own document that provided GDP (gross domestic product) figures for the April-June and July-September quarters indicated that there will be a review of the data later.
He predicted that India’s fiscal deficit will be higher than last year and the state’s fiscal deficit will also be much larger.
“Disinvestment income will also be meager. Tax and non-tax income will be meager,” Kumar said.
He said that India’s economic recovery will depend on several factors including how quickly vaccination can be done, how quickly people can get back to work.
“We will not go back to the 2019 production level in 2021. Perhaps in 2022, after the vaccination is complete, we will regain the 2019 production level in 2022,” Kumar said.
He added that the growth rate in the coming years will be good due to the low base effect, but production will be lower than in 2019.
When asked whether the government should relax the fiscal deficit target in the next budget, Kumar said: “It has been argued since July that the government should allow the fiscal deficit to increase and spend more and give money to the unorganized sector and in rural areas “. ”
On the recent imposition of new restrictions on foreign direct investment (FDI) from countries that share a land border with India, he said “it is an instinctive reaction.” If you look at the last three or four years, all the startups had large investments from China, Kumar added.
Emphasizing that like China, India should also invest more in research and development, Kumar said: “Now we find ourselves in a bad situation where we have to make knee-jerk reactions like increasing tariffs, withdrawing from RCEP (Economic Partnership Integral Regional), and have new FDI rules, to stop China’s investment. ”
He pointed out that when investments are lacking in India, restricting foreign investment is going to put us in more trouble.

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