Reforms To Assist India To Grow At 6.5-7% From FY23: CEA
The country's economy will start witnessing a growth of 6.5 to 7 percent from fiscal 2023 onward, helped by various reforms undertaken by the govt thus far and also as the COVID-19 vaccination drive progresses, Chief Economic Advisor Krishnamurthy Subramanian said.
He said the second wave of COVID-19 is unlikely to possess a really significant on the economy.
The country's economy contracted by 7.3 percent in fiscal 2020-21.
“Together with the reforms and specialize in vaccination, I expect growth to start out hitting close 6.5 to 7 percent from FY23 onwards and accelerate from there on,” Subramanian said at a virtual event organized by Dun & Bradstreet.
“Given the many reforms that are done over the last one and a half years, I even have no hesitation in saying that I anticipate a decade of high growth for India.”
He said the momentum in recovery that was seen within the fourth quarter of FY21 and overall within the last half of FY21 got impacted to some extent by the second wave of COVID-19.
While the second wave was quite devastating on the health side, the economic impact of that has been limited because the second way was much shorter in duration compared to the primary wave and therefore the economic restrictions that were placed were primarily at the state level, he said.
“We expect the impact of the second wave to be not very large,” he said.
Subramanian said the supply-side reforms are undertaken by the govt in sectors like agriculture, labor, export PLI scheme, change in MSME definition, creation of the bad bank, privatization of public sector banks among others, are getting to push growth within the future.
He said vaccination is vital for the country to get over the pandemic and to convert COVID-19 into effectively the common flu and reduce its impact significantly.
While addressing the event earlier, Economic Advisory Council to the Prime Minister (EAC-PM) Chairman Bibek Debroy said the GDP rate of growth may be a function of what the bottom was within the last year.
“Since the bottom in 2021 dropped by 7 and a few percentage point percentages, correspondingly the (real rate of) growth in 2021-22, due to that low base, are going to be high,” he said.
He expects a true rate of growth of around 10 percent during the present fiscal year.
Debroy said the pandemic has resulted in whittling away of two years of economic development.
“So it's not only the target of USD 5 trillion dollars (economy by 2024-25) moves distant but also the very fact that adhering to the 2030 SDGs (sustainable development goals) target for India is going to be a touch harder.
According to him, the indications that have surfaced thus far show that the company profitability results are pretty good.
He said that despite good corporate profitability, employment in urban areas has not picked up.
“One of the worrying signs at the instant is, although I said the company sector seems to be doing well, there are not any robust signs of employment learning within the urban areas, so far.
"This is basically a function of what has been happening to un-incorporated enterprises and that I have in mind MSMEs,” Debroy added.
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