New Delhi: India will see a sharp V-shaped recovery in the third and fourth quarter of the current fiscal, but FY21 GDP growth would ultimately be in negative territory as the coronavirus lockdown led to serious demand and supply dislocations, 15th Finance Commission Chairman N K Singh said.
Stating that global economic depression will continue to cast shadow on growth prospects next fiscal, Singh said the economic expansion in 2022-23 would determine whether or not the initiatives to revive growth are sustainable.
This pandemic has led to enormous economic consequences by way of lockdown which brought serious dislocation both on demand and supply sides, Singh said here.
“Q1 and Q2 will not be lofty performances to say the least, I think Q3 and Q4 of the current fiscal year, there would be a very sharp V-shaped recovery, not necessarily that anything fundamental will happen or may happen but due to a lower base. Nonetheless, fiscal year as a whole will end on a negative trajectory,” he added.
Meanwhile, as the economy reels under the pandemic and post lockdown woes, Reserve Bank of India (RBI) Governor Shaktikanta Das is of the view that extreme risk aversion by financial institutions will have adverse outcomes for all.
Noting that India’s financial system remains sound, Das, in his foreword to the RBI’s latest Financial Stability Report, wrote that in the current environment, the need for financial intermediaries to proactively augment capital and improve their resilience has acquired top priority.
In the evolving milieu, while risk management has to be prudent, extreme risk aversion would have adverse outcomes for all, he wrote.