Recovery of economy showing mixed signals
Most private forecasts expect the Indian economy to do better than expected in 2020-21 and
2021-22. A research note by Nomura economists Sonal Varma and Aurodeep Nandi projects a GDP contraction of 6.7% in 2020-21 and growth of 13.5% in 2021-22. This is greater than the first advanced estimates of 7.7% contraction in 2020-21 and RBI’S forecast of 10.5% in 2021-22. Equity markets have gained 12.6% since the presentation of the Union Budget, which among other things has increased the share of capital expenditure in total budgetary spending and committed to a higher fiscal deficit to boost growth. An HT analysis of some high frequency indicators that track household financial health and investment demand, however, presents a mixed picture of the economy, a clear indication that while there will be a sharp recovery, it may not be as widespread as some believe.
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