Indian economy to see positive growth in Q4: Niti Aayog
We have now shrugged off the negative impact of the pandemic and are moving towards a sustained high growth trajectory in the coming years, said Niti Aayog Vice-Chairman
New Delhi: The Indian economy is coming out of the pandemic-induced degrowth and GDP growth will enter the positive territory in the fourth quarter of this fiscal, Niti Aayog Vice Chairman Rajiv Kumar said on Wednesday. In an interview, Kumar also said the Centre’s new agriculture reform laws are aimed at increasing the income of farmers and the present agitation was a result of misunderstanding and miscommunication which need to be removed.
“The second quarter GDP figure (contraction of 7.5 per cent) reflects that the economy is coming out of this pandemic-induced degrowth phase and my expectation is that in the third quarter, we will achieve the same level of economic activity as the year-ago period. And the fourth quarter will show a small but positive growth over the previous year because the government has… ushered in many structural reforms and some more are in the pipeline,” he said.
Stating that all those reforms will provide a very strong foundation for accelerating the economic growth in the fiscal year 2021-22 and beyond, Kumar said,”we have now shrugged off the negative impact of the pandemic and are moving towards a sustained high growth trajectory in the coming years”.
About India’s growth figure in the current fiscal year, he said it will be better than negative 9 or 10 per cent, as has been forecast by many, including the RBI. Kumar noted that the Covid-19 had an unprecedented negative impact on economic activities but this was completely in the nature of a natural disaster and not related to the regular economic cycle. “Therefore, it is quite irrelevant to talk about the economy being in a technical recession,” he emphasised.
On better than expected manufacturing growth of 0.6 per cent in the second quarter of 2020-21, Kumar said this has come as a pleasant surprise. “But there is a base effect but nonetheless, it is also endorsed by the higher collection of GST in the last three months,” he said, adding that the manufacturing sector will continue to do well in the third quarter because of the festival demand and the pent-up demand.
India’s economy recovered faster than expected in the September quarter as a pick-up in manufacturing helped GDP clock a lower contraction of 7.5 per cent and held out hopes for further improvement on better consumer demand. The Gross Domestic Product (GDP) had shrunk by a massive 23.9 per cent in the first quarter of the current fiscal as the Covid-19 lockdown pummelled economic activity. The second straight quarter of contraction pushed India into a technical recession for the first time.
The Reserve Bank of India has projected the Indian economy to contract 9.5 per cent in the current fiscal while the International Monetary Fund (IMF) and World Bank estimates contraction at 10.3 per cent and 9.6 per cent, respectively.
