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India’s macroeconomic situation is improving rapidly and the country’s GDP growth will turn positive in the third and fourth quarter of the current financial year, noted economist Ashima Goyal on Sunday.
In an interview to PTI, Goyal said that the government-announced COVID-19 epidemic and the management of gradual unlock have helped in avoiding many COVID-19 peaks.
He said that the estimate of development is constantly being revised by various agencies.
“We are now seeing consensus negative forecasts falling below double digits. As 4 unlocks in September, that prevents states from restricting inter-state movements. We are seeing supply chain disruptions ease And activity are rapidly picking up. Growth will be positive in Q3. Q4. ”
Goyal, who has been appointed as a member of the Monetary Policy Committee (MPC) of the Reserve Bank of India (RBI), said that a number of reforms are progressing and that higher sustainable growth will be sustainable.
“India’s diversity and flexibility, as well as surplus liquidity benefits are becoming available after a period of severe liquidity shortages, which are contributing to the change,” she said, speaking to PTI in her personal capacity .
Answering a question on high retail inflation, Goyal said it is due to transient supply side factors such as unseasonal rains and supply-chain disruptions that are unlikely to persist.
“In addition, there are long-term changes that are likely to reduce inflation,” she said.
Noting that repo rates and targets and communications on inflation boost inflation expectations, he said liquidity and counter-cyclical macroprudential rules can be used to encourage growth.
Goyal, an economics professor at the Indira Gandhi Institute of Development Research (IGIDR), said, “RBI has implemented a number of best measures, which are implemented without any adverse effect, such as moratorium.”
He said that the government is providing a fairly net demand incentive as it is spending more, although revenue has fallen.
“The budgetary fiscal deficit has already exceeded the budget estimate and the fiscal deficit of the United Center and states is expected to reach 12 percent this year,” he said.
Answering a question on monetization of deficit by RBI, Goyal said that true demonetisation is only when RBI has to finance the deficit automatically by transferring it to the government without increasing government debt.
Thereafter arbitrary risks in the money supply may increase, he said, adding that this is not needed because more savings and limited OMOs will be able to absorb the lending required by relatively conservative government at lower interest rates.
RBI’s demonetisation of fiscal deficit broadly means central government printing currency to take care of any emergency spending and bridge its fiscal deficit. This action is done in emergency situations.
Goyal stressed, “Maintaining RBI independence is critical to long-term stability.”
RBI will unveil its next monetary policy in December.
Moody’s Investors Service on Thursday projected India’s growth forecast for (-) 10.6 percent for the current fiscal year, up from its earlier estimate of (-) 11.5 percent, saying the latest stimulus priority is manufacturing and job creation. Prioritizes, and changes focus on long-term development. .
Other global agencies Fitch Ratings and S&P have projected India’s economic contraction to be 10.5 per cent and 9 per cent respectively.
Last month, the World Bank said that India’s economy is expected to grow by (-) 9.6 percent in this fiscal year, while the IMF projected (-) 10.3 percent in 2020.
