Revival on, India will be Fastest Growing Economy Next Year

Key indicators are improving post the unlocking, says Nirmala Sitharaman

Finance Minister Nirmala Sitharaman expects the Indian economy to be among the fastest growing the next year. Speaking at the India Energy Forum by CERAWeek on Tuesday, Sitharaman said economic growth may be zero or even in the negative this year because of the Covid-19 lockdowns.

“There was a very firm lockdown because we put our lives before livelihood. We wanted to ensure that preparatory work for tending to the pandemic should be done in the first quarter. As a result, there was a contraction which happened during the first quarter and post which the unlocking has been steadily happening. We can see the revival now, particularly in the Purchasing Managers’ Index (PMI), which shows a spurt in the number, the highest after 2012,” she said adding that it is going to be steady and sustainable.

“If this happens within the third and fourth quarter, we expect that the overall GDP growth, notwithstanding the pandemic, should be somewhere in the range predicted by the International Monetary Fund (IMF),” she said.

In its latest World Economic Outlook, the IMF further cut growth forecast by projecting contraction at 10.3 per cent for FY21. This is the second downgrade for India by the IMF after it reversed its forecast of 1.9 per cent growth in April to a 4.5 per cent contraction in June for 2020-21.

“Even if it is going to be in the negative or near zero this time, the next year will very clearly have India as one of the fastest growing economies. We are looking at that kind of a trajectory. Indicators show that primary sector, related sectors of agriculture, rural India are doing well.

Energy sector investments

On the steps for investments in the energy sector, Sitharaman said, “We are investing in strategic reserves, not just domestic, but also in (oil and gas) fields outside of India. We will be part of the global value chain in such a way that we are able to play a part in the (crude oil and natural gas) price determination... .”

“We have encouraged all the provinces to ensure energy efficiency, adoption of LED in households, distribution of Liquefied Petroleum Gas for cooking, which will reach every household before 2023. And making sure that every village gets electrified so that no fossil fuel is going to be used,” she added.

Sitharaman said the Centre is offering incentives to the States so that the distribution networks are far more efficient, there are no pilferages and no transmission losses. She said old-fashioned thermal units will be shut down and efficient gasification will drive the country’s energy requirements.