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Photo: Reuters
Photo: Reuters

Act before it’s too late

Saving fiscal firepower for later may sound prudent, given how long our covid crisis is expected to last, but it is still inadvisable. The longer we delay pump-priming, the harder it’ll prove to stimulate growth and effect a revival

New independent projections of our economy’s performance confirm the prolonged pain we face. On Tuesday, Goldman Sachs slashed its gross domestic product (GDP) forecast for India deeper into contraction zone, to a 14.8% decline in 2020-21 output. It wasn’t the only one turning gloomier on India. Fitch Ratings dropped its outlook to a 10.5% shrinkage this year, more than double the 5% rate it had predicted earlier.

While the very worst may be behind us, with the first quarter of this fiscal year having lost nearly a quarter of the GDP recorded in April-June 2019, the odds of a double-digit fall for the full year seem to have shortened. Such an outcome would be a matter of deep concern for a country that needs jobs to be created by the million every month. But with the government holding back on a second round of stimulus, our prospects of a recovery appear to be getting grim. Saving fiscal firepower for later may sound prudent, given how long our covid crisis is expected to last, but it is still inadvisable. The longer we delay pump-priming, the harder it’ll prove to stimulate growth and effect a revival. We need to act without further ado.

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