New Delhi: Niti Aayog Vice-Chairman Rajiv Kumar has claimed that India will achieve double-digit growth in the current fiscal and said that the country was better prepared to deal with the economic repercussions of my future pandemic wave.
“We are now hopefully getting past our (Covid-19) pandemic… and the economic activities will be strengthened as we get into the second half of this (fiscal) year given what I have seen for example various indicators, including the mobility indicators,” Kumar told PTI in an interview.
India’s economy was hit hard by the first wave of Covid-19 and as soon as things were looking to improve the nation was hit by the second wave.
Kumar said that the recovery of the Indian economy will be “very strong” and predicted that those agencies and organisations that have downgraded India’s GDP estimates may have to revise them again as growth picks up.
“Because I expect India’s GDP growth this (fiscal) year would be in double digits,” he said.
Data shows the economy contracted by 7.3 per cent in the financial year ended March 31, 2021.
Rating agencies such as S&P Global Ratings and Fitch cut down India’s growth after the slow pace of growth.
S&P Global Ratings cut down the growth forecast from 11 per cent to 9.5 per cent while Fitch downgraded its estimate from 12.8 per cent to 10 per cent.
Responding to a query on concerns over a possible third COVID wave, Kumar said the government is much better prepared in case such a situation comes up.
“I think the government is far better prepared now to face the third COVID wave, if at all it does come up… I feel the impact of the third wave on the economy will be much weaker than it was during the second wave and the beginning of the first wave,” he said.
Kumar added that the preparation of both the Centre and State is necessary in case of a third wave.
When quizzed about whether the Centre will achieve its ambitious disinvestment sector, Kumar pointed out that despite the second wave markets have remained unaffected and have touched new heights.
“I think this sentiment not only will continue but it will strengthen as we go forward… India story remains very strong especially with respect to the FDI which has now created a new record both for 2020-21 and between April to June in 2021-22,” he said.
When asked about the option of the government issuing COVID bonds to raise money, Kumar said, “Well give it whatever names you like, the point is that if the government needs to borrow more money for expanding capital expenditure, it could go ahead because that will attract more private investments”.
He noted that the government should issue bonds, whether these are COVID bonds or infrastructure bonds, the name is not so material, and pointed out that bond yields have not risen despite the higher borrowing requirements of both the central and state governments.
“This means that there is an appetite for government borrowings and the deficit would be financed without much difficulty,” he said.
Making a case for stepping up borrowing, Kumar mentioned agencies like the IMF, the World Bank and the ADB recommending that one should not worry too much about the size of the deficit because of the special circumstances the pandemic has created.
According to the 2021-22 Budget, the government’s gross borrowing was estimated at Rs 12.05 lakh crore for this fiscal. On high CPI and WPI inflation numbers, Kumar said that he does not want to second guess RBI here and he would leave it to them.
“RBI’s Monetary Policy Committee (MPC) minutes and as well as their announcements have made it very clear that at the moment inflationary expectations are not entrenched at high level.
“And that this is perhaps a temporary phenomenon and we will go back to inflation level within the target range of RBI,” he said.
With inputs from PTI