As has been reported on several occasions, many agencies have significantly lowered forecasts for India’s economic growth for the current financial year. This has been done due to the devastating second wave of Covid-19 that has ravaged human life and India’s economic stability. Recently, even the Reserve Bank of India had to cut the country’s growth forecast steeply to 9.5 per cent. However, various government officials have come forward with their support for a faster growth to be anticipated in the coming month. One such official is Niti Aayog’s Vice Chairman Rajiv Kumar who is positive that growth will pick up pace from the month of June. Additionally, he expects a “full-fledged” economic recovery starting from the month of July. He stated that, “The recovery will start from June itself and will get pace from July 2021,”.
According to the VC of Niti Aayog, if a third wave of the pandemic does not hit the country, the current financial year can even end with a double-digit growth. According to Kumar this will be possible, as he has full faith in government’s commitment to the vaccination programme, which he believes will be critical to accelerate the economy.
Talking on the issue of cutting taxes on petrol and diesel, whose prices have skyrocketed recently, he stated that the issue of lowering fuel taxes is a complicated one as it concerns both the central and state governments. Given, government’s humungous expenditure on vaccination drive and food scheme, reducing taxes on fuel prices may widen government’s fiscal deficit, thus, the fuel taxes are a concern for state and central government. NITI Aayog’s VC stated that “The Centre should do something about petrol-diesel price rise, but we need balance also. The government has the responsibility to control inflation, I hope that those who have this responsibility will balance.”
It is to be noted that Kumar’s statements came a day after the Reserve Bank of India (RBI) lowered the country’s growth forecast for the current fiscal from 10.5% to 9.5 per cent. As aforementioned, NITI Aayog’s VC, is positive for a full-fledged growth and thus believes that growth projections will be revised once the economy starts to recover.
Talking about the impact of the second wave on the economy, he noted that the impact of the COVID-19 second wave will be felt in the first quarter of FY22. He stated that “RBI cuts GDP growth forecast for FY22 to 9.5 per cent from 10.5 per cent due to the impact of 2nd wave, which is going to impact our economy in 1st quarter,”. He added that the economy will recover “below than expected in 1st quarter” and will grow at a pace of “10 per cent-10.5 per cent in FY22.”