NEW DELHI: India could witness a negative economic growth rate of six per cent in the fiscal year 2021, but grow at a healthy growth rate of seven per cent in 2022, as per Barclays. The investment bank has revised downwards its growth forecast for India for the ongoing financial year from 3.2 per cent earlier as the slack in economic activity persists due to localised lockdowns, weak aggregate demand and the modest pace of policy support.
Also, the rising number of Covid-19 cases, both geographically and in terms of the resolution period, is weighing on recovery prospects, it added. The Atmanirbhar Bharat relief package is helping support the rural economy, but not much beyond, and similarly the monetary policy support is present, but not necessarily increasing, it noted.
“A relatively large part of the package had components of liquidity support and had also incorporated off-balance sheet spending in the form of food transfers to make up for lack of spending firepower in the system. The actual spending that would have hit the fiscal bottom line was only around Rs 2.1 lakh crore (~1% of GDP), but it is encouraging to see several programs under implementation, especially for the rural economy,” it added.