Parul
According to news reports, the Indian economy is expected to see a faster turnaround given the impending rollout of vaccine and increased mobility operations as the economy opens up but a lot will also depend on the upcoming Budget for 2021-22 to set its course.
India, which had in 2019 overtaken the UK to become the fifth-largest economy in the world, was knocked off course somewhat due to the pandemic as businesses were shut, consumption slumped, investments took a hit and jobs were lost and in wake of which the economy got relegated to the sixth spot in 2020.
The Budget for the next fiscal starting April 2021 that Finance Minister Nirmala Sitharaman will present in February will be the starting point for picking up the pieces.
As per the analysts, the government’s spending plans, particularly on infrastructure and social sectors as well as relief to sections hit by the pandemic and lockdown, will dictate the pace of recovery. While agriculture with bountiful harvest has been a driver of India’s economic recovery, the government’s stimulus spending in response to the COVID-19 crisis has been significantly more restrained than most other large economies.
FM Nirmala Sitharaman announced a total stimulus package of Rs 29.87 lakh crore, or 15 percent of GDP. That equals the total spending envisaged in the government’s budget for the year to March. But the actual fiscal cost has been estimated at around 1.3 per cent of GDP, including 0.7 per cent for the incentive program whose expense is spread over five years.
While, the rating agencies and analysts have raised their expectations of GDP growth in fiscal to March 2021 with RBI predicting a small positive growth in the January-March quarter.
