Economy to register double digit growth in current financial year: NITI Aayog Vice Chairman

Economy to register double digit growth in current financial year: NITI Aayog Vice Chairman

With India's story remaining "very strong", the economy will register a double-digit growth within the current fiscal and therefore the disinvestment climate also looks better, said Niti Aayog vice chairman Rajiv Kumar.

He also asserted that the country is ready during a much better manner just in case there's a Covid wave as states have also their own lessons from the previous two waves.

"We are now hopefully getting past our pandemic and therefore the economic activities are going to be strengthened as we get into the last half of this (fiscal) year given what I even have seen for instance various indicators, including the mobility indicators", Kumar told PTI in an interview.

The Indian economy has been adversely impacted by the coronavirus pandemic and therefore the recovery has been relatively sluggish within the wake of the second Covid wave.

Against this backdrop, the Niti Aayog vice chairman exuded confidence that the economic recovery are going to be "very strong" and people agencies or organisations which have revised their GDP estimates downwards for this fiscal may need to revise them upwards again.

"Because, I expect India's GDP growth this (fiscal) year would be in double digits," he said.

The economy contracted by 7.3 per cent within the fiscal year ended March 31, 2021.

Among rating agencies, S&P Global Ratings has cut India's growth forecast for the present fiscal to 9.5 per cent from 11 per cent earlier, while Fitch Ratings has slashed the projection to 10 per cent from 12.8 per cent estimated earlier. The downward revisions were mainly because of slowing recovery post second Covid wave.

Indicating the likelihood of a robust rebound, the reserve bank has pegged economic process at 9.5 per cent within the current fiscal that ends on March 31, 2022.

Asked when private investments will devour , Kumar said in some sectors like steel, cement and land , significant investment in capacity expansion is occurring already.

In the consumer durable sector, it'd take longer because consumers might feel a touch hesitant thanks to uncertainty on account of the pandemic, he said. "Full-fledged private investment recovery, we should always expect by the third quarter of this (fiscal) year".

Responding to a question on concerns over a possible third Covid wave, Kumar said the govt is far better prepared just in case such a situation comes up.

"I think the govt is way better prepared now to face the third Covid wave, if in the least it does come up. I feel the impact of the third wave on the economy are going to be much weaker than it had been during the second wave and therefore the beginning of the primary wave", he said.

According to Kumar, the government's preparation is extremely significant and also the states have learned their own lessons.

Recently, the govt announced a further ₹23,123 crore funding, mainly aimed toward ramping up health infrastructure.

On whether the govt are going to be ready to achieve its ambitious disinvestment target this fiscal, Kumar said that despite the second Covid wave and its significant impact on the health side, markets have remained buoyant and that they touched new heights.

"I think this sentiment not only will continue but it'll strengthen as we proceed ... India story remains very strong especially with reference to the FDI which has now created a replacement record both for 2020-21 and between April to June in 2021-22", he said.

Pointing out that an honest number of IPOs of startups are lined up, he said,"the climate for disinvestment is looking better and that i am very hopeful that the disinvestment target would be fully realised."

The government has budgeted ₹1.75 lakh crore from stake sales publicly sector companies and financial institutions. Achieving the target are going to be crucial for the government's finances which are stressed because of the pandemic and resultant increase in spending activities.

When asked about the choice of the govt issuing Covid bonds to boost money, Kumar said, "Well provides it whatever names you wish , the purpose is that if the govt must borrow extra money for expanding cost , it could plow ahead because which will attract more private investments".

He noted that the govt should issue bonds, whether these are Covid bonds or infrastructure bonds, the name isn't so material, and acknowledged that bond yields haven't risen despite the upper borrowing requirements of both the central and state governments.

"This means there's an appetite for state borrowings and therefore the deficit would be financed without much difficulty", he said.

Making a case for stepping up borrowing, Kumar mentioned about agencies just like the IMF, the planet Bank and therefore the ADB recommending that one shouldn't worry an excessive amount of about the dimensions of the deficit due to the special circumstances the pandemic has created.

According to the 2021-22 Budget, the government's gross borrowing was estimated at ₹12.05 lakh crore for this fiscal.

On high CPI and WPI inflation numbers, Kumar said that he doesn't want to second guess RBI here and he would go away it to them.

"RBI's Monetary Policy Committee (MPC) minutes and also as their announcements have made it very clear that at the instant inflationary expectations aren't entrenched at high level.

"And that this is often perhaps a short lived phenomenon and that we will return to inflation level within the firing range of RBI", he said.

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