India will bounce back on growth path: Economist

Chakraborty, who is the director of the National Institute of Public Finance and Policy (NIPFP), said inflation may remain at an elevated level as there was a significant fiscal and monetary expansion in the last 18 months.

“The current macroeconomic situation is certainly much better than what it was one year back. We are seeing recovery in most sectors,” he said.

Chakraborty noted COVID-19 vaccination has been going on at a fast rate in India.

“And hopefully if there is no third wave, we will be back on a path of economic growth which will be sustainable and increasing,” the eminent economist added. According to Chakraborty, COVID-19 vaccination brings a sense of health security and should help the resumption of normal economic activity, particularly in the services sector, which contributes more than 50 per cent of India’s GDP.

The Reserve Bank of India (RBI) has lowered the growth projection for the current financial year to 9.5 per cent from 10.5 per cent estimated earlier while the IMF has projected a growth of 9.5 per cent in 2021 and 8.5 per cent in the next year.

Noting that GST collections have been quite good in the last couple of months, Chakraborty said, “if we are able to manage our deficits in a manner that does not become a problem later, recovery will be sustainable and durable.”