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A young boy selling vegetables sits on a hand cart without wearing a mask on the outskirts of New Delhi. (AP)
A young boy selling vegetables sits on a hand cart without wearing a mask on the outskirts of New Delhi. (AP)

Indian economy to reach pre-Covid-levels by end of FY2022: Niti Aayog's Rajiv Kumar

  • The Reserve Bank of India has also revised its forecast of economic growth for the current 2020-21 fiscal year to (-) 7.5% as against its earlier forecast of (-) 9.5%

As the Gross Domestic Product (GDP) contraction in this fiscal year is expected to be less than 8%, Niti Aayog vice chairman Rajiv Kumar on Sunday said that the country's economic growth is likely to reach pre-coronavirus levels by the end of the 2021-22 financial year.

"We should reach pre-COVID-19 levels at the end of fiscal year 2021-22 for sure," Kumar told news agency PTI when asked about growth projection for the next fiscal year. The Niti Aayog vice chairman added that the GDP contraction this fiscal year is expected at less than 8%.

The Reserve Bank of India (RBI) has also revised its forecast of economic growth for the current 2020-21 fiscal year to (-) 7.5% as against its earlier forecast of (-) 9.5%.

The economy is recuperating faster than anticipated, RBI chief Shaktikanta Das had earlier said, adding that the recovery in rural demand is expected to strengthen further while recovery is urban demand is gaining momentum.

The RBI projected inflation at 6.8% for Q3 of this fiscal year.

Meanwhile, Goldman Sachs expects India's economy to contract by 10.3% in 2020-21. Moody’s expects the same to be of the magnitude of (-)8.9%.

Economy recovered faster than expected

India's economy recovered faster than expected in the September quarter as a pick-up in manufacturing helped GDP clock a lower contraction of 7.5% and held out hopes for further improvement on better consumer demand.

Replying to a question on asset monetisation, Kumar said this is ongoing work and it has received attention at the highest level. "We will continue to pursue this and make sure that the targets of asset monetisation are reached," Kumar stressed.

The government is looking to raise 2.10 lakh crore through disinvestment in the current fiscal. This includes 1.20 lakh crore from Central Public Sector Enterprise (CPSE) stake sale and 90,000 crore from sale of government stake in financial institutions, the PTI report added. 

Talking about banking reforms, he said the sector needs further expansion and an increase in competition because India's private debt to GDP ratio remains limit to mid 50s.

Stating that in case of other emerging economy, private debt to GDP ratio is well beyond 100 per cent, Kumar said that "so we need to increase private debt and this will happen when our banking sector will expand". 

On the Indian agriculture sector, he said the Niti Aayog now is very strongly pushing the programmes for chemical free natural farming which has a potential to reduce cost for agriculture production dramatically and also has very positive impact on the environment.    

Kumar said the expansion of natural farming all over the country will make Indian agriculture more competitive and it also promises to have a significant positive impact on farmers' income.

With agency inputs

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