New Delhi: Even as there are visible signs of revival in the economy, the growth of Gross Domestic Product (GDP) may be in the negative zone or close to zero, said Finance Minister Nirmala Sitharaman on Tuesday. Speaking at the India Energy Forum of CERA Week, she noted that the revival is going to be steady and sustainable.
As a result of the COVID-induced lockdown, Indian economy shrank by a massive 23.9 per cent in the April-June quarter of 2020-21, the biggest on record in the post-independence period. Sitharaman said a “very firm lockdown” was imposed beginning March 25, with the government putting lives before livelihood to contain the pandemic.
The demand, however, picked up in the festival season, the finance minister said. “Demand for durable goods, agriculture equipment, tractors, vehicles are all going up. Festival season has commenced in India, as a result of which I expect demand go up and be sustainable also,” she emphasized.
High-frequency economic indicators show continued improvement both in month-on-month (MoM) and year-on-year (YoY) terms, she said. Manufacturing Purchasing Managers’ Index (PMI) rose to 56.8 in September, an eight-and-a-half-year high, while services PMI, albeit marginally below the 50 mark, continued to increase from its April trough.
Sitharaman further said recent data indicates revival in the economy, with PMI number being the highest since 2012. “If sustainable revival is going to happen between quarter three and quarter four, we expect that the overall GDP growth is going to be in the negative or near zero this time,” she said. She asserted that India would regain the tag of the fastest-growing major economy by next year.
The Reserve Bank of India has projected the Indian economy contracting by 9.5 per cent in the current fiscal, while International Monetary Fund (IMF) and World Bank estimate the contraction at 10.3 per cent and 9.6 per cent respectively.