Tribune News Service
New Delhi, January 29
The Economic Survey tabled in Parliament today made a strong case for increased borrowings and relaxing the fiscal deficit laws to push for over 11 per cent growth in 2021-22.
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lockdown saved lives
Lockdown prevented 37 lakh cases and 1 lakh deaths. The country took short-term pain for long-term gain. GDP growth will recover, but lost lives can’t be brought back. – KV Subramanian, Chief Economic Adviser
The economy is expected to contract by 7.7 per cent of the GDP during the current fiscal, followed by an increase to 11 per cent in 2021-22.
India will be the fastest growing economy in the next two years. Projections by various national and international agencies, including the IMF, project this resilience of the Indian economy, it said.
Making a strong case for taking debt to make up for the loss in revenue, the survey pointed out that India had a track record of expansionary fiscal policy focussed on infrastructure spending. “We need to replicate the same,” it suggested.
Even if growth is fuelled by borrowings, it will enable redistributive policies that lift people out of poverty. There is no fear of a debt trap because even if India were to have a low GDP growth rate of 3.8 per cent each year from 2023 to 2029, the debt will still come down. “If the interest rate is less than growth rate, debt, as a percentage of the GDP, declines,” it noted.
The survey was critical of higher interest rates that India has to pay because it gets a lower sovereign rating than it deserves. “Emerging giants are not getting the credit ratings their economic fundamentals demand,” it said while pointing out India’s ability to pay is “gold standard”. According to the survey, the government’s welfare schemes can help India achieve the sustainable development goals of reducing poverty, improving access to drinking water, sanitation and housing by 2030. The gap between urban and rural, and among different income groups, can be addressed through welfare schemes such as Jal Jeevan Mission, Swachh Bharat Mission and PM Awas Yojana.