The GDP growth current fiscal (April 2020 to March 2021) will be either negative or zero, Finance Minister Nirmala Sitharaman said at the India Energy Forum. “The next year, India will very clearly see itself as one of the fastest-growing economies,” she said.
Sitharaman said a “very firm lockdown” imposed in March put lives ahead of livelihoods. She claimed that preparatory work was done by the government during the lockdown to deal with the pandemic.
She said that with the Unlock procedure, macroeconomic indicators have shown signs of revival. “The rural sector is doing well and auto sales have seen good growth,” she said.
Sitharaman added that the festive season will further boost the economy, raising hopes of positive growth in the third and fourth quarters. “Foreign Direct Investment (FDI) inflow have seen 13 per cent growth in COVID-19 affected April-August 2020 compared to April-August 2019,” she said.
She observed that “efficient gasification will drive the Indian economy” and that “India is ready to partner with private players for nuclear energy.”
The focus for the government is on public spending to boost economic activity, Sitharaman added.
According to economists, a draconian lockdown weakened an already financially-strained corporate and banking sector. However, it must be noted that even before the pandemic, growth had slowed to 4.2 per cent in FY20. Since the end of 2018, consumption, investment, and exports have been slowing down.
On the upside, agriculture performed well and low oil prices and lower imports due to less domestic demand offered some relief.
India’s GDP contracted 23.9 per cent in the first quarter of 2020-21 and is expected to contract 9.5 per cent for the whole fiscal, as per estimates by the Reserve Bank of India.
Even though the government is optimistic about the revival of the economy, the unpredictability of the pandemic might be a matter of concern, as cases continued to rise primarily in the east and south.