Finance Minister Nirmala Sitharaman on Tuesday said that growth rate in the country’s gross domestic product (GDP) is also hovering at close zero all over the current financial year. Then again, with signs of economic revival, the country may polite be one of the crucial fastest-growing large economies all over the next financial year.
“We expect that the overall GDP growth, however the pandemic, must be close zero this time. Next year, we can see India itself as one of the crucial fastest-growing economies,” Sitharaman said addressing the India Energy Forum meet by CERAWeek. This comes at a time when the International Monetary Fund (IMF) had projected India’s GDP to plunge by 10.3 per cent all over the current financial year, revised down in comparison to its June forecast of 4.5 per cent decline.
India’s economy has been the fastest growing large economy, but of late it has been overtaken by China. As an example in 2019-20, India’s economy grew 4.2 per cent, while the Chinese economy expanded six per cent in 2019. Against the contraction in India’s economy expected for the current financial year, IMF projected China’s economy to grow 1.9 per cent in 2020. Then again, India’s economic growth is projected by the Fund to overhaul China’s next year as the former is predicted to grow 8.8 per cent while the latter at 8.6 per cent.
As a signal of revival, the minister highlighted the foreign direct investment numbers for the period between April and August 2020. “All through this period, FDI inflows grew by around 13 per cent in comparison to a non-covid 2019. Such an increase never happened in India’s case,” Sitharaman said. She also highlighted the revival in Purchasing Managers’ Index (PMI) as a key to the upcoming sustainable revival of the economy expected all over the third and fourth quarter of the present financial year
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“We will see a revival especially relating to PMI. There was once a spurt in numbers as it was once the highest after 2012. This itself indicates that the revival is stable and sustainable. This sustainable revival will happen in Q3 and Q4,” she said. As per reports, the headline seasonally adjusted IHS Markit India Manufacturing PMI increased from 52.0 in August to 56.8 in September–highest since January 2012. In PMI, an indicator above 50 means expansion and below 50 means contraction. In the month of April, the indicator had contracted after being consecutively on the growth territory for 32 months.
The finance minister also pinned hopes on the festive season in driving India’s revival story by pushing consumer demand. “Indicators show that primary sectors, related sectors of agriculture and rural India are all doing very polite. Consequently, consumption for durable goods, agricultural equipment and vehicles are all going up. Festival season has commenced in India. On account of which, I expect demand to grow up and could be sustainable,” she said.
Sitharaman highlighted that as a step towards this revival from the pandemic situation, the primary focus areas of India would be infrastructure and public spending on infrastructure. She expressed hope that the 6000-odd projects mentioned under the National Infrastructure Pipeline would be the key drivers for this. Other focus areas of the government include agriculture and related activities such as processing of food, the export of agricultural goods and making certain the connectivity to the nearby ports are also there to spice up the imports. The government could also be targeting the energy and fintech sectors too as the key focus areas in the revival story.
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