‘India’s GDP growth may rebound to 5% in FY22’
MUMBAI: The country’s economy, which is likely to contract by 5 per cent in the current fiscal, may expand by around 5 per cent in the next financial year, former RBI governor Duvvuri Subbarao said.
Rating agency Crisil on Tuesday had said the Indian economy may shrink by 5 per cent in fiscal 2021, adding this recession could be the country’s fourth since Independence and perhaps the worst to date.
“I do believe that getting up to 5 per cent next year (FY22) is quite probable. The reason I say that is because this (COVID19) is not a natural disaster. Our factories are still standing, our infrastructure and transport systems are still there,” Subbarao said.
He was speaking at a webinar on ‘Indian Economy - Navigating through a Crisis’, organised by the Centre for Financial Studies (CFS) at Bhavan’s SPJIMR business school.
“Once the lockdown is lifted and the economy is given a green signal to restart, I am sure that we can ramp up pretty soon and reach at least 5 per cent (growth rate),” he said.
Speaking at the same webinar, former deputy chairman of the erstwhile Planning Commission, Montek Singh Ahluwalia, also said there is a possibility of 5-6 per cent growth in fiscal 2021-22.
“But it would be mistake to treat that as recovery because if you are down 5 per cent this year (FY21) and you are up 6 per cent from that level then what it means is that during FY21-22 you will be at the same level as you were in 2019-20,” Ahluwalia pointed out.
According to him, the country is going to face its worst recession in the current fiscal.
Subbarao further said a sharp decline in growth would mean a disruptive adjustment even for a rich country.
“For a poor country like us, it would mean enormous pain and hardship for millions of low income persons, firms and enterprises, especially in the informal sector, going bankrupt and it could mean our financial stability becoming vulnerable,” he added.
Amid this grim situation, the former RBI governor said he sees two silver linings -- relative stability of the external sector and bumper agricultural crop production, which would support the economy.
Commenting on the over Rs 20 lakh crore fiscal stimulus package announced by the government, Subbarao said, “Within the fiscal constraints of the government, they have done a good job.”