Bleak Expectations Of A Revival

Is Prime Minister Narendra Modi’s Atmanirbhar Bharat package a baggage for the stakeholders?

- Yagnesh Kansara & Arindam Mukherjee

As expected, India’s fourth-quarter Gross Domestic Product (GDP) has slowed down to 3.1 per cent, lowest in last 11 years, data released on the last Friday of month revealed. This number fully reflects the slowdown, which the economy has been going through in the last two years and it also amply highlights the importance of a demand-led recovery for sustainable future growth. This number is more important than a quarterly number. Because this number would be the base against which the impact of the lockdown and consequent demand destruction, loss of productivity and employment would be mapped. What could be the fall from this level is the question that would be asked.

In this backdrop, we need to dissect the much talked about “Atmanirbhar Bharat” package worth ₹20 lakh crore announced by Prime Minister Narendra Modi on May 12 and need to do thread-bare analysis of its adequacy and relevancy.

Commenting on Q4 GDP numbers, Upasna Bhardwaj, Senior Economist, Kotak Mahindra Bank, says, “The number partly reflects the sudden halt in economic activity led by the COVID-19-related response. While the slowdown in economy was already underway, the COVID-19-related disruption has further exacerbated the issue. We expect the Q1FY21 to record a sharp contraction of over 14 per cent, with only a gradual recovery thereafter. For the year, we continue to expect contraction in GDP (over 5 per cent). Accordingly, expansionary fiscal and monetary response will have to continue to aid the economy.”