India’s Double-digit growth and V-shaped recovery still possible: Nilesh Shah
India’s hopes of achieving double-digit growth in the financial year 2021-22 and maintaining the economy’s V-shaped recovery after last year’s 68 day nationwide lockdown depends on the seriousness of its response to the present Covid crisis.
Nilesh Shah, a member of the PM’s Economic Advisory Council, says we have it in our power to keep these hopes alive although he does accept the scale and duration of the present Covid wave and whether it forces a second nationwide lockdown on the country are factors that are hard to evaluate and assess today. A lot depends on how quickly we can curb and control the present Covid crisis.
In a 30 minute interview to Karan Thapar for The Wire,Nilesh Shah, who is also Managing Director of the Kotak Mahindra Asset Management Co, said there are four steps which must be scrupulously observed if India wishes to reach double-digit growth in 2021-22. They are a) a ban all large gatherings, whether political or religious, b) maintain social distancing, c) scrupulously wear masks all the time and d) sanitization and hand-washing.
In the interview to The Wire, Nilesh Shah said if the govt is forced to declare a second nationwide lockdown, requiring the govt to announce a sizeable lockdown relief package, his preference is that this unforeseen additional expenditure should be financed through a gold amnesty scheme, which raises revenues from the sizeable amount of gold in private hands, and by fully meeting, or even exceeding, the budget’s disinvestment target and the govt’s intention to sell assets. In the interview, he said strategic privatization rather than disinvestment of shares was the right procedure.
However, Mr Shah said he was not averse to the govt allowing the fiscal deficit to rise above the budgeted target of 6.8 % provided that does not crowd out private sector investment or fuel inflation. Even though India’s debt to GDP ratio is at 90 and might even rise above 100, he is confident rating agencies will understand a fiscal deficit higher than the budget figure of 6.8.
Speaking specifically about the 16-day lockdown in Maharashtra, Mr. Shah told the Wire that provided it is a short lockdown—ie between 15 and 30 days—the state will make up any production loss during the lockdown period rest of the financial year. That, he also later said, was true of the wider Indian economy in the event the Covid crisis forces the country into a nationwide lockdown.
Mr. Shah accepted there are sections of the Maharashtra economy that have not been covered by the state govt 5500 crore relief package and these include MSMEs and stand-alone shopkeepers but also the entertainment and hospitality industry, which comprises hotels, restaurants, malls, cinemas, and other hospitality- connected businesses.
The above is a paraphrased precis of Nilesh Shah’s 30-minute interview with Karan Thapar for The Wire. Though recounted from memory it is not inaccurate. However, please see the full interview for a better and more comprehensive understanding of Mr. Shah’s viewpoint.
There’s a lot more in the interview than has been covered in this precis. The full interview should go up on The Wire’s website between 5 and 6 pm today (17/4).
Video link to Karan Thapar’s interview with Nilesh Shah, member PM Eco Advisory Council, for the Wire: Double-digit growth and V-shaped recovery still possible if we respond appropriately to Covid crisis
Here is the link: https://youtu.be/DVdciOUoDUg
Double Digit Growth Still Possible if We Respond Appropriately to Covid Crisis, Says PM Eco Adviser
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