The Indian economy is staring at an 11-year low GDP growth of 5 per cent for the financial year 2019-20 on demand slump. ETCFO spoke to a handful of economists to find out what they think about the FY21 target.
“The target is a little bit on the optimistic side, though 6 per cent growth is still achievable with some effort,” said Saugata Bhattacharya, Chief Economist at Axis Bank who forecasts a GDP growth of 5.7 per cent in FY21.
To realise the aim, he stressed the government must focus on “privatisation and wealth creation”, which is also reflected by the economic survey 2019-20.
The government is banking hugely on its divestment programme to shore up its revenue receipts which have come under pressure amid growth slowdown. It has lined up strategic sales of debt-ridden Air India and profit-making oil refiner BPCL, among others.
To Shubhada Rao, Chief Economist at Yes Bank, implementation of announcements holds the key in realising the 6-6.5 growth target. “Execution is the key. The reform measures that may be announced in the upcoming Budget should not only be comprehensive but also need to be complementary,” Rao said.When it comes to privatisation, she stressed the government should focus on strategic sales and not on just mere dilution of the stakes.
Kunal Kumar Kundu, economist at investment banking firm Société Générale was more direct. He said, “The growth target projected by the economic survey seems unachievable. It is only setting the tone for optimistic tax revenue assumptions for the Budget.”
India is targeting a $5 trillion economy by 2024-25. To achieve the vision, the economic survey emphasised the country needs to shift its gears to accelerate and sustain a real GDP growth rate of 8 per cent.
In the last Budget, the economic survey pegged the GDP growth for FY20 at 7 per cent, which is now forecast lower at 5 per cent as per the first advance estimates.
The Reserve Bank projected the growth number at 5.1 per cent for the ongoing fiscal.
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