Economic Survey And Growth Trajectory: Challenges Before Modi Govt

The Economic Survey has forecast a "V-shaped" recovery for the Indian economy. The customary economic survey presented in parliament ahead of general budget gives us a glimpse of the state of economy and the measures to e taken to ensure growth trajectory.

In a V-shaped recovery- down and up sharply- the economy suffers a sharp but brief period of decline in economic activities with a clearly defined trough, followed by a strong recovery. As such, the GDP growth for this recession forms a V-shape.

Undoubtedly, it was one of the most challenging time as country passed through a tough period following outbreak of the pandemic. In a way the survey tells us the country's response to the pandemic.

Though the survey says that India's response to coronavirus was, primarily, focused on saving lives than on jobs, yet it doesn't say a word on migrant crisis caused by the prolonged lockdown.

According to data, In the first quarter Indian economy dived down almost 24%- a world record . So, It was very difficult to recover from an enormous drop. But for the full fiscal, the survey has projected a contraction of 7.7% and V-shaped recovery in the next year. GDP is seen growing by 11% in the next fiscal year from April 2021 to March 2022.

The gross domestic product (GDP) contracted by a record 23.9% in April-June and by 7.5% in the second quarter.

Going by the economic survey, economy hasn't done as bad as expected after the extended lockdown and slowdown in economic activities.This is because recovery is driven mainly by farming sector. As such contribution of the farmers is much higher than even manufacturing sector. Its warning to the govt that the current long period of farmers; agitation may harm economy much more.

In view of "V-shaped" recovery, Modi govt faces a daunting task to speed up recovery and GDP growth. It needs massive public spending without burdening the people with burden of taxers. On the contrary, in order to lift the demand. more sops for manufacturing and service sectors are needed. The government will have to continue with an expansionary fiscal stance," says the survey.

Moreover, in order to facilitate buoyant revenue collections in the medium term and enabling a sustainable fiscal management, demand needed to be lifted appreciably . Higher the demand, income and spending will be higher. and more revenue to the govt coffer, Accordingly, fiscal deficit for current as well as next financial is likely to overshoot. As such the general budget on Monday, in all probability is likely to offer more incentives and demand elastic to facilitate the "v-shaped" recovery. Wait till Monday.

(Chander Sharma)