Chief Economic Advisor KV Subramanian on Friday said the Indian economy had hit “a trough” or a low point in terms of economic growth but expressed hope of achieving the targeted Gross Domestic Product growth in the 2020-’21 financial year.
Finance Minister Nirmala Sitharaman tabled the Economic Survey for 2020-’21 in the Parliament on Friday afternoon. The survey predicted that Gross Domestic Product will grow between 6% and 6.5% during the next financial year. It also projected industrial growth at 2.5% but added that there was a chance of a widening of the fiscal deficit.
“Peaks and troughs in business cycle phenomena show that we have hit a trough as regards economic growth, hopeful of achieving 6.0%-6.5% GDP growth in 2020-21,” Subramanian said at a press conference. The chief economic advisor pointed out that firms that had borrowed a lot of funds between 2008 and 2012 had invested less during the 2013-’17 period. He said the theme for the Economic Survey for the 2020-’21 financial year was wealth creation.
“Wealth creation as an idea and wealth creators as its medium becomes the central theme of the Economic Survey,” Subramanian said. The economic slowdown since 2017 has been the cause of the “lagged effect” of reduction in investments from 2013 that occurred due to a “credit boom-bust”, he added.
“If wealth had not been eroded by wilful defaulters, we could have spent almost double the amount on social sectors,” Subramanian said. The reason behind the slowdown of the country’s economic growth was also partially because the global economy had slowed down in 2019, the chief economic advisor added.
Subramanian added that large companies with unreliable financial statements affected the credibility of statements of other firms too.
“There is no better way to relate economics to the common person than by looking at the price of a plate of food paid by an Indian,” he said. “Thalis have become more affordable since 2006-’07.”
The Indian economy grew 4.5% in the July-September 2019 quarter, the slowest in six years. The economy has been affected by weak consumption and job cuts. On January 7, the government predicted 5% Gross Domestic Product growth rate for 2019-’20 – the lowest in 11 years.