Economic growth set to bounce back as slump bottoms out; govt takes steps to boost investment: Official

Sanyal said economic growth was set to accelerate to 6 percent in the financial year beginning in April, compared with an estimated growth of 5.0 percent in the current one

Reuters February 12, 2020 11:09:00 IST
Economic growth set to bounce back as slump bottoms out; govt takes steps to boost investment: Official
  • The Insolvency and Bankruptcy Code, introduced in May 2016, has helped banks to recover billions of dollars stuck in outstanding corporate loans and offer loans to new borrowers

  • Sanyal said economic growth was set to accelerate to 6 percent in the financial year beginning in April, compared with an estimated growth of 5.0 percent in the current one

  • Finance Minister Nirmala Sitharaman, who tabled her annual budget earlier this month, told parliament on Tuesday that the signs of “green shoots were visible” and the economy was no longer in trouble

New Delhi: Economic growth is poised to bounce back after slipping to a more than six-year low of 4.5 percent in the July-September quarter as the government has taken measures to prop up investments and consumer demand, a top government adviser said.

“Corporate tax reductions, the Insolvency and Bankruptcy Code and the banking sector reforms have helped and will help propel growth further,” Sanjeev Sanyal, principal economic adviser at the finance ministry, told Reuters.

The Insolvency and Bankruptcy Code, introduced in May 2016, has helped banks to recover billions of dollars stuck in outstanding corporate loans and offer loans to new borrowers.

Sanyal said economic growth was set to accelerate to 6 percent in the financial year beginning in April, compared with an estimated growth of 5.0 percent in the current one.

Economic growth set to bounce back as slump bottoms out govt takes steps to boost investment Official

Representational image. Reuters

But many private economists are less optimistic, saying the current downturn may continue for the next few quarters due to a dip in private investments and tepid consumer demand.

Nomura said Asia’s third-largest economy will see a sub-par recovery, and forecast 4.7 percent GDP growth for the current fiscal year and 5.7 percent for the next fiscal year.

Sanyal dismissed the conservative estimates and said his numbers took into account early signs of recovery in manufacturing and a pick-up in consumer demand.

He said the government expected that average consumer price inflation would fall to 4% in the next financial year beginning April, after a recent spike driven largely by food prices.

There is enough space for the central bank to further cut interest rates, however, as inflation was likely to ease following a fall in vegetable prices, he said.

“While there was a slowdown, this slowdown has by and large now bottomed out, and if anything from here on, growth is going to go up,” Sanyal said.

Finance Minister Nirmala Sitharaman, who tabled her annual budget earlier this month, told parliament on Tuesday that the signs of “green shoots were visible” and the economy was no longer in trouble.

The Reserve Bank of India last week kept it policy rates steady but downwardly revised the country’s growth forecast for the first half of the next fiscal year to 5.5-6.0% from an earlier projection of 5.9 percent-6.3 percent.

Updated Date:

Subscribe to Moneycontrol Pro at ₹499 for the first year. Use code PRO499. Limited period offer. *T&C apply

also read

Unions oppose Centre's move to allow private sector banks in govt business, term it 'unfair'
Business

Unions oppose Centre's move to allow private sector banks in govt business, term it 'unfair'

The AIBEA said the move will make it more difficult for public sector banks to lend to weaker and priority sectors at concessional rates of interest

India's GDP may turn positive at 1.3% in Dec quarter of FY2020-21: DBS Bank report
India

India's GDP may turn positive at 1.3% in Dec quarter of FY2020-21: DBS Bank report

The government will release the GDP numbers for the October-December quarter of the current fiscal on Friday

Indian economy on track for recovery in next fiscal but banking sector to show improvement by 2023, says S&P
Business

Indian economy on track for recovery in next fiscal but banking sector to show improvement by 2023, says S&P

S&P Global Ratings said India faces a permanent loss of output versus its pre-pandemic path, suggesting a long-term production deficit equivalent to about 10 percent of GDP