Government must use its strong mandate to deliver expeditiously on reforms, it says

The Economic Survey 2019-20 projects India’s economy to grow in the range of 6-6.5% in the next financial year (2020-21), while asking the government to use its strong mandate to deliver expeditiously on reforms.

“On a net assessment of both the downside/upside risks, India’s GDP growth is expected to grow in the range of 6-6.5% in 2020-21,” as per the Survey tabled in Parliament on Friday.

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Noting that 2019 was a difficult year for the global economy with world output growth estimated to grow at its slowest pace of 2.9% since the global financial crisis of 2009, the Survey said that the Indian economy slowed down to 4.8% GDP growth in H1 of 2019-20 from 6.2% in H2 of 2018-19, amidst a weak environment for global manufacturing, trade and demand.

It added that in an attempt to boost investment, consumption and exports, the government in 2019-20 has taken important reforms towards speeding up the insolvency resolution process under Insolvency and Bankruptcy Code, easing of credit, particularly for the stressed real estate and NBFC sectors, and announcing the National Infrastructure Pipeline 2019-2025.

“Based on CSO’s first Advance Estimates of India’s GDP growth for 2019-20 at 5%, an uptick in GDP growth is expected in H2 of 2019-20. The government must use its strong mandate to deliver expeditiously on reforms, which will enable the economy to strongly rebound in 2020-21,” it added.

On a net assessment, the Survey said, upside risks should prevail, particularly when the government, with “a strong mandate, has the capacity to deliver expeditiously on reforms”. GDP growth of India should strongly rebound in 2020-21 and more so on a low statistical base of 5% growth in 2019-20, it said.

The Survey added that headline inflation rose from 3.3% in H1 of 2019-20 to 7.35% in December 2019-20 on the back of temporary increase in food inflation, which is expected to decline by year end. “Rise in CPI-core and WPI inflation in December 2019-20 suggests building of demand pressure,” it said.