Indian govt foresees 'more than full recovery' in 2021-22

12 Feb '21

3 min read

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The Indian finance ministry’s monthly report on growth and inflation outlook for 2021-22 portends more than full recovery. “FY 2021-22 will be the year to rebuild with the IMF [International Monetary Fund] projecting growth of output at 11.5 per cent, Economic Survey at 11 per cent and the RBI’s [Reserve Bank of India] Monetary Policy Committee at 10.5 per cent,” it said.

“With the IMF keeping India’s growth projections elevated at 6.8 per cent in FY 2022-23, India is back as the fastest growing major economy in the world,” the finance ministry’s Monthly Economic Report said.

The country has also become the COVID-19 vaccine hub of the world, it noted.

Indian economy is estimated to contract 7.7 per cent in the current financial year, primarily due to the pandemic.

“The structural reforms and the policy push under the Aatmanirbhar Bharat Mission along with the slew of measures announced in the Union Budget 2021-22 towards achieving broad-based inclusive growth will strengthen the fundamentals of the economy and bring it back on to a strong and sustainable growth path in the year ahead,” the report said.

The latest Economic Survey projected growth rate to rebound to 11 per cent during 2012-22 while the budget estimated real gross domestic product (GDP) to be between 10-10.5 per cent.

The survey pitched for growth through counter cyclical fiscal policy emphasising that growth alone is the answer to sustaining the public debt burden of the country, the report said.

The budget implemented the counter cyclical fiscal policy by raising the target of fiscal deficit to 6.8 per cent of GDP, more than double the fiscal responsibility and budget management target, it said.

With the expanded borrowing programme mostly meant for funding the enhanced capital outlay, the budget has set in place the multiplier impact on growth to support the prescribed fiscal deficit target of 4.5 per cent of GDP in 2026 under the fiscal glide path.

The report noted that various measures taken by the government since March 2020 against the pandemic ensured minimum loss of life.

“Early lockdown, health-infra ramp up, gradual unlocking, blanket testing, social distancing, calibrated fiscal stimulus to minimise supply side disruptions and revive demand and structural reforms pursued diligently by government since March, 2020 have now come to fruition to limit the fatality rate to globally one of the lowest at 1.2 per cent,” it said.

According to the report, with each day ending with positive COVID-19 cases falling to new lows and economic activity levels attaining new peaks, India has worked its way around the pandemic through the will of the brave people and astute policy interventions by the government.

Fibre2Fashion News Desk (DS)

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