India’s GDP growth is expected to come back to “near normalcy” as one goes towards the rest of the fiscal year, KV Kamath, banking industry veteran and former head of the New Development Bank of BRICS Countries, said on Wednesday.

“On the business environment — indicators such as low interest rates, ample liquidity, strong foreign currency flows, inflation (nothing to worry about) and key indicator of strong balance sheets of large corporates, which carry the system, augurs well for the economy,” Kamath, who recently headed the five member RBI-appointed committee on Covid-19 related debt restructuring, said at the 115th Annual Session of the PHD Chamber of Commerce and Industry (PHDCCI), held in a virtual format.

By March 2021, all wheels of the economy will be spinning at the pace that the country wants, he added. It may be recalled that India’s Gross Domestic Product (GDP) had contracted 23.9 per cent, largely impacted by the coronavirus-induced lockdown since March 25.

Key parts of Aatmanirbharata

Kamath highlighted that the top 50 corporates of the country today virtually have no debt while they were leveraged 4:1 about 20 years back and 2:1 about 10 years back.

Also read: Is there a manufacturing turnaround?

“This prepares us where we have to go and that is what is of interest. India has unending space and opportunity to grow for the next 25 years. There is enough space to grow at double digits for the next 25 years. We have enough drivers like infrastructure, modernisation of manufacture and agriculture, urban rebuild, housing for all and digital super cycle — all these are key parts of the Aatmanirbharata that will happen. We will build Aatmanirbharata on completely new and efficient platform,” he said.

Morgan stanley view

Ridham Desai, Managing Director, Morgan Stanley, said the Indian economy is coming back very quickly and that he expects the contraction in GDP growth for the entire fiscal will only be 4.7 per cent — unlike the12-13 per cent contraction projected by various economic agencies.

He said that Morgan Stanley is of the view that the manufacturing sector output will triple over next ten years. This comes on the back of Morgan Stanley view that one is entering a multi-polar world and the government policy changes to attract investments from other countries.

“We expect capital spending by companies from both domestic and abroad to come back as result of this change into multi polar world and post Covid desire to diversify supply chains,” he said.

FinMin take

Sanjeev Sanyal, Principal Economic Advisor, Department of Economic Affairs, Finance Ministry, said that the government was in the process of systematically opening up the economy and services sector will be entirely opened up by this month-end.

Those sectors that have been opened such as car sales, railway freight movement have all come back. “We recognise there is need for providing further stimulus as appropriate. There is space both on the monetary and fiscal side to do this and willingness to use this,” he said.

Sanyal also made it clear that Aatmanirbhar Bharat is not a return to import substitution of the 1950s.”It is also not the case that we are trying to recreate the licence permit raj. Aatmanirbhar Bharat is about creating simpler paths for entrepreneurial class to leverage itself into various risk taking opportunities. We want to free you (entrepreneurs) up just as we have freed up farmers recently,” he said.

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