The economy will witness negative or zero growth this fiscal, Finance Minister Nirmala Sitharaman said on Tuesday, noting that the government expects India to be one of the fastest-growing economies next fiscal. She added the Centre expects that domestic demand would witness a sustainable uptick as a result of growing demand in rural India as well as a boost in demand in the ongoing festive season.
“If that sustainable revival is going to happen between Q3 and Q4, we expect that the overall GDP growth, notwithstanding the pandemic … even if it is going to be in the negative or near zero this time, the next year will be very clearly India seeing itself as one of the fastest-growing economies,” said Sitharaman at the India Energy Forum. India’s GDP contracted 23.9 per cent in the first quarter of 2020-21 and is expected to contract 9.5 per cent for the whole fiscal, as per estimates by the Reserve Bank of India. Even before Covid-19 stuck and related lockdowns, the growth had slowed to 4.2 per cent in FY20.
Sitharaman highlighted that the manufacturing PMI, a monthly indicator based on a survey of private sector companies, in September rose to an eight-and-a-half year high of 56.8. She said that an uptick in key economic indicators, coupled with an expected rise in demand during festive season, suggested a sustainable increase in domestic demand.
“All indicators show that the primary sector, related sectors of agriculture and rural India are all doing very well. As a result, the demand for durable goods, agricultural equipment factors, vehicles, are all going up,” said Sitharaman. In September, demand for transport fuels and electricity surpassed pre-Covid levels.
The Finance Minister said infrastructure spending was the top priority of the government and the second priority was to ensure India’s surplus grains, vegetables and fruits would be ready for export.
“We are attracting a lot of funds to which the spend on infrastructure is the top priority,” she said, adding that infrastructure investment was mainly aimed at boosting agricultural exports through connectivity to ports and required infrastructure for food processing as well as cold chains.
Sitharaman said that reforms encouraging FDI inflows and India’s low corporate tax rates had led to a 13 per cent rise in FDI inflows in April-August, as against the year-ago period, despite the pandemic.
“All of them (foreign investors) have really been attracted by those companies which have set global standards in the governance practices. So India has a list of such companies which because of the best practices are even during, Covid able to convince investors,” she said.
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Meanwhile, as per a PTI report, NITI Aayog Vice Chairman Rajiv Kumar, speaking at the forum, said India’s growth would be in positive territory in the second half of this fiscal.
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