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Photo: AFP
Photo: AFP

Sobering forecast

The Organization for Economic Cooperation and Development’s latest outlook for India is sobering. It now expects India’s economy to contract 9.9% in 2020-21

The Organization for Economic Cooperation and Development’s latest outlook for India is sobering. It now expects India’s economy to contract 9.9% in 2020-21. Though better than the 10.2% dip it forecast in September, the number is nothing to write home about, especially since the world economy is expected to do far better.

It’s unclear if the OECD has taken note of India’s latest gross domestic product data that showed a smaller-than-expected decline. Yet, the broad picture seems to be of an economy still wracked by some uncertainty. True, a few recent indicators have raised hopes of a sharp recovery, but such signals have been patchy, at best. November’s goods and services tax collection figure, for instance, exceeded the 1-trillion mark for the second successive month. Railway freight recorded a bounce, too. Manufacturing has held up, even if a bit too unevenly. What remains unclear is whether a recent demand revival will flag. Pay-cheque compression could yet see a post-festive return of thrift and the related paradox that Keynes warned of. All in all, it still seems too early to say if we’ll escape a near double-digit contraction this fiscal year.

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