India’s economic growth to reach pre-COVID levels by end of FY2022: NITI Aayog

India would reach pre-COVID economic levels by the end of fiscal year 2021-22 for sure, says NITI Aayog vice chairman Rajiv Kumar. He said the GDP contraction this fiscal year is expected at less than eight per cent.

The latest projections signifies a V-shaped recovery, with the GDP contraction easing to 7.5 per cent in the July-September period from a record 23.9 per cent in the previous quarter. As such, the Reserve Bank of India has also revised its forecast of economic growth for the current 2020-21 fiscal year to (-)7.5 per cent as against its earlier forecast of (-)9.5 per cent.

RBI governor Shaktikanta Das had earlier said the economy is recuperating faster than anticipated, with recovery in rural demand expected to strengthen further. In the September quarter, India’s economy recovered faster than expected as pick-up in manufacturing helped GDP clock a lower contraction of 7.5 per cent. Das said the economy is rebounding faster than expected from a COVID-19 pandemic induced slump earlier in the year. He also warned that signs of recovery were far from being broad based.

Moreover, the government, as per a report in PTI, is looking to raise Rs 2.10 lakh crore through disinvestment in the current fiscal, including Rs 1.20 lakh crore from Central Public Sector Enterprise (CPSE) stake sale and Rs 90,000 crore from sale of government stake in financial institutions.

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In regards to banking reforms, Kumar said the sector needs further expansion and an increase in competition because India’s private debt to GDP ratio remains limit to mid 50s. In case of other emerging economy, he pointed out that private debt to GDP ratio is well beyond 100 per cent. “So we need to increase private debt and this will happen when our banking sector will expand.