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The second generation reforms initiated by the government over the past two and half years will ensure India is on a strong growth phase over the decade, according to Chief Economic Advisor KV Subramanian.
“While the second wave seems to have passed off quickly, I am cautiously optimistic about a V-shaped recovery over the next few months and during the current fiscal. The reforms initiated by the Government over the past two and half years will trigger a phase of sustained economic growth making it amongst the fastest growing economies in the world,” he said.
Delivering the second Om Prakash Tibrewala Endowment lecture on India’s Economy: Recovery and way forward, the CEA said “after the first Covid wave in 2020, which impacted the country’s economy due to lockdown, when the GDP was down by 24 per cent in Q1, there has been a steady and gradual recovery. The huge capital expenditure made by the Government has resulted in a quick V-shaped recovery.”
Later, during the Q&A session, he said that the Government had predicted a 11 per cent GDP growth this fiscal. However, after the second wave, the RBI had predicted a 9.5 per cent GDP growth.
‘GST a pointer to trend’
“We believe, based on various macro indicators that the recovery is underway. India is poised for a high positive growth after last year’s decline.”
Citing some of the parameters to make such judgement, he said that GST collections, which have been consistently topping over ₹1-lakh crore in spite of the economic and business disruptions is a good pointer for a positive trend.
On being asked about the huge target set by government for divestment and whether the they would be able to achieve these targets, the CEA expressed confidence that this will gather momentum in the next three quarters with LIC and BPCL being the major ones.
Divestment
“Even though some believe that about three months has been lost due to the second pandemic wave, the divestment process is poised to accelerate. One need not worry as the ground work for divestment is going on from the last fiscal itself and things are ready to take this forward,” he explained.
‘Sustained impact’
“The reform process initiated now like the one during the PV Narasimha Rao-led government in the 1990s will have far reaching impact on the country’s economy. As the economy is on the recovery path, we are poised for a much accelerated growth from 2023 onwards,” he said.
The CEA said “the benefits of economic reforms in a large country like India show up with a lag. Just like the reforms initiated in the 90s are felt even now, one will see the benefits of second generation reforms over the decade/s.”
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