Indian economy to witness "V-shaped" rebound with 11 pc growth next fiscal: Economic Survey

Indias economy is likely to grow by 11 per cent in the fiscal year beginning April 1 as a vaccine drive and rebound in consumer demand help it emerge from the carnage inflicted by a strict coronavirus lockdown the Economic Survey said on FridayThe rebound will follow an estimated 77 per cent contraction in the Gross Domestic Product GDP in the current financial year ending March 31 the document an annual report card on the economy tabled in Parliament by Finance Minister Nirmala Sitharaman saidThis is the steepest annual contraction of the economy in the history of independent India The economy had last witnessed its last annual contraction of 52 per cent in the fiscal year 197980The contraction in the current 202021 fiscal April 2020 to March 2021 compares with a revised growth rate of 4 per cent in the previous yearThe rollout of vaccines against COVID19 which has killed nearly 154 lakh in the country will reenergise the worlds fifthlargest economy with a growth rate that is strongest since the 1991 economic liberalisationThe Vshaped recovery is supported by COVID vaccination drive the survey saidChief Economic Adviser Krishnamurthy Venkata Subramanian who led the team which authored the prebudget document said Indias strict lockdown prevented 37 lakh cases and one lakh deathsThe country took short term pain for long term gain While GDP growth will recover and it has lost human lives cannot be brought back he said at a postpresentation press conferenceStating that the government calibrated demandside policies he said mega vaccination drive should enable recovery especially in the services sectorPush the accelerator only when brakes are removed he said referring to Indias COVID19 strategyThe government announced a raft of measures including cash and free ration and gas to vulnerable as well as credit support to industry to lift the economy once the twomonthlong nationwide lockdown began to be easedThe forecast for next year is in line with the International Monetary Funds IMF estimate of 115 per cent expansion which will once again make India the fastestgrowing major economy in the world ahead of Chinas 81 per cent paceThe survey sees headline inflation moderating going forward and said there is a need for more sustained and calibrated measures to facilitate the process of economic recovery in the new fiscal yearIndias GDP contracted by a record 239 per cent in Q1 AprilJune and 75 per cent in Q2 reflecting the unparalleled effect of the containment measures that were taken to control the pandemicThe fundamentals of the economy remained strong as gradual scaling back of lockdowns along with the astute support of Aatmanirbhar Bharat Mission stimulus has placed the economy firmly on the path of recovery the survey saidIndia had witnessed four contractions in GDP since 196061 The contraction in 196566 and 197172 coincided with wars and droughts while the year 197980 was associated with a severe drought and political instabilityA common factor in all these years was a steep fall in agricultural output The year 202021 on the contrary has been bestowed with abundant monsoons leading to the agricultural sector emerging as the silver lining of the economy The contraction this year reflects the once in a century crisis unleashed by the pandemic and associated public health measures it saidFaster normalisation of business activities amid gradual lifting of restrictions higher festive and pentup demand and policy support is expected to translate into a fasterthananticipated economic recovery over the second halfThe rollout of vaccination it said will be supported by the supplyside push from reforms and easing of regulations push to infrastructural investments boost to manufacturing sector through the Productivity Linked Incentive Scheme recovery of pentup demand for the services sector increase in discretionary consumption subsequent and pick up in credit given adequate liquidity and lowinterest ratesThe survey recommended an increase in public healthcare spending from 1 per cent to 253 per cent of GDP Also the health infrastructure must be agile to respond to pandemics healthcare policy must not become beholden to saliency biasTelemedicine needs to be harnessed to the fullest by investing in internet connectivity and health infrastructureThe survey said India overregulates the economy resulting in regulations being ineffective even with relatively good compliance with the processThe solution is to simplify regulations and invest in greater supervision which by definition implies greater discretion it said suggesting asset quality review exercise immediately after the forbearance be withdrawnIndia is expected to witness a current account surplus during the current financial year after a gap of 17 years it saidThe country recorded a current account surplus of 31 per cent of GDP in the first half of the year largely supported by strong services exportsNet foreign portfolio investment inflows recorded an alltime monthly high of USD 98 billion in November 2020 as investors risk appetite returnedIndia which saw the worlds fastest rollout of 10 lakh vaccines in 6 days is also the only country among emerging markets to receive equity FII inflows in 2020This story has been sourced from a third party syndicated feed agencies Midday accepts no responsibility or liability for its dependability trustworthiness reliability and data of the text Midday managementmiddaycom reserves the sole right to alter delete or remove without notice the content in its absolute discretion for any reason whatsoever