ECONOMY
I
INDIAN ECONOMY AWAITS ROBUST REVIVAL
Pradeep Philipose
ndian economy has been severely hit due to the disruption caused by the Covid-19 pandemic. According to a recent World Bank report, Indian economy will shrink 3.2 per cent in the current financial year. The GDP growth had slowed to 4.2 per cent in the year ended March 2020. The International Monetary Fund (IMF) has projected India’s growth at 1.9 per cent and the global growth at minus 3 per cent. The recovery will depend to a large extent on the revival strategy adopted by the government. The key challenge for the Indian economy is a substantial contraction in domestic demand. Private consumption which constitutes more than half of the aggregate demand in the
26
August 2020
economy is facing a severe slump.
There was a sustained fall in the saving and investment rates with unutilised capacity in the industrial sector. Similarly, the investment demand as reflected in gross fixed capital formation (GFCF) is likely to see a significant contraction. Centre for Monitoring Indian Economy predicts that the GFCF is likely to contract by 57.5 per cent in the first quarter of fiscal 202021. During the last three quarters of 2019-20, the investment demand contracted 4.1 per cent, 5.2 per cent, and 5 per cent respectively. The economic package which was announced by the Central government to counter the downturn due to Covid pandemic comes to around Rs 20 lakh
Executive Knowledge Lines
