Very uncertain macroeconomic situation, the economy will contract by 10% in fiscal year 21: Pronab Sen

NEW DELHI: India’s current macroeconomic situation is “very uncertain” and the country’s GDP could contract by about 10 percent in the current fiscal year, former chief statistician Pronab Sen said on Sunday. In an interview, Sen said that while the general macro-management of the economy by the Modi government has not been very good, this particular slowdown is really out of their control.

“At the moment, the current macroeconomic situation in India is very uncertain. I would say we should be very, very cautious. I think there is too much optimism.

“… India’s real economic growth could be closer to -10 percent in 2020-21,” he said.

Sen said the quarterly GDP figures are still derived from some corporate accounts and that corporations have not fared as badly as the non-corporate sector.

“According to the RBI, the Indian economy is likely to contract 7.5 percent in 2020-21.”

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“We know that MSMEs have been much more affected than corporations. Therefore, the number of headlines that appear in the national accounts is an overly optimistic image of the economy,” said the eminent economist. Sen also emphasized regaining investor confidence.

Investors are new people who put their money into creating new production capacity, which is completely lacking, he said, adding that until that returns, the economy cannot grow.

“Because at the moment, as things stand, our production capacity will not be much higher than in 2019-20. And in fact it will be less because part of the capacity may have closed,” said the former chief. the statistician pointed out.

Sen, who also heads the Standing Committee on Statistics (SCES), said the committee was unable to finalize its report.

India’s economy recovered faster than expected in the September quarter, as a rebound in manufacturing helped GDP shrink less than 7.5 percent and held out hopes for further improvement in better demand. of consumers.

“Our production capacity will be less than that because part of the capacity may have closed.”

– Pronab Sen

Gross Domestic Product (GDP) had shrunk by a whopping 23.9 percent in the first quarter of the current fiscal year when the COVID-19 lockdown hit economic activity.

The second consecutive quarter of contraction pushed India into a technical recession for the first time.

According to the RBI, the Indian economy is likely to contract 7.5 percent in 2020-21.