Thursday, 29 September, 2022
HomeEconomyGDP growth could slip to zero or negative in 1st quarter due...

GDP growth could slip to zero or negative in 1st quarter due to lockdown: NITI Aayog VC

Kumar, however, ruled out the possibility of a recession as after June, he does expect some sectors such as hospitality, transport, entertainment and FMCG to start functioning.

Text Size:

New Delhi: The GDP growth could slip to zero or even negative in the first quarter due to the impact of the countrywide lockdown imposed to contain the spread of the deadly Covid-19, NITI Aayog vice-chairman Rajiv Kumar has said.  

While there is a chance that this may not happen since essential services are functioning, the virtual shutdown of all other sectors of the economy could result in a zero or negative GDP growth, Kumar said in an interview to ThePrint.  

“See all the essential services are still working, so a small part of the economy is moving, that means it should not slip to zero,” Kumar said. “But it could slip to zero or even negative, who knows? It depends on how long the economic curfew lasts… What is clear is that the economy would be hit very hard during this quarter.”  

Beyond June it would not be possible to provide any forecasts, Kumar said. “There is too much uncertainty — it depends on the length, severity and spread of the pandemic.”  

Kumar, however, ruled out the possibility of a recession as after June, he does expect some sectors like hospitality, transport, entertainment and FMCG to start functioning.  

“We expect the service sectors, which constitute 55 percent of the economy, to pick up immediately after; so there could be a revival of sorts.”  

Asked if there is a consensus in the government that the economy and economic revival is second priority at the moment, Kumar said, “Saving lives has to be first priority, yes, and we should stick to that consensus.”  

Explaining the rationale behind not announcing a big economic stimulus for the lockdown period, Kumar said, “We are not as opulent as some of the Western economies… We wish we were, but we are not.”  

“We will have to calibrate our fiscal response so that we do not go overboard,” he added. “But this is not to say that more steps are not in the pipeline. 

Earlier this week, Finance Minister Nirmala Sitharaman had announced a Rs 1.7 lakh crore relief package for the poor and migrant workers who have been hit the hardest by the lockdown. 

RBI Governor Shaktikanta Das Friday announced a deferment of all loan repayments, effectively allowing borrowers to not pay any equated monthly instalments or EMIs for any loans until 30 June. 

Kumar said that we should look at the government response both as a fiscal and monetary package. “Together, it is a significant package.”  

“It has not been quantified but the debt moratorium for three months announced by the RBI would cost the banks some amount of money,” Kumar said. “The fact that the governor said that it would lead to Rs 3.75 lakh crore extra liquidity into the system – that has its own financial implications and cost that the government will have to bear.” 

“The government will have to sell its bonds, and the government debt will go up in that sense,” he added.  


Also read: This is the team advising PM Modi in India’s battle against coronavirus


‘Can’t ask how relief schemes will be funded’

Kumar, however, said it would not be correct to ask how the schemes under the relief package would be funded by the government.  

“One cannot compare the government to the household… Theoretically speaking, the government has the recourse to unlimited money since it can print it,” he said. “For example, Trump has announced a $2 trillion package, now where is that money going to come from?”  

But in his personal capacity, and not as vice-chairman of the government think-tank, Kumar said that the times are calamitous enough for the government to ask individuals to donate to the government coffers. 

“In India, the private economy is always a surplus economy, so if the government feels the need, it could ask individuals to come forward and donate,” Kumar said. Emphasising that the view is a personal, and not official one, Kumar further said that it is something that late prime minister Lal Bahadur Shastri had done during the 1965 war.  

“There is 25,000 tonnes of gold with people, trusts, temples in India… In the 60s, I remember our mothers and grandmothers coming forward to give it to the government,” he said. “I believe we are in a similar situation today, and that is the kind of response we need from people.” 


Also read: Army may recall retd personnel with medical expertise if fight against Covid-19 intensifies 


 

 

Subscribe to our channels on YouTube & Telegram

Support Our Journalism

India needs fair, non-hyphenated and questioning journalism, packed with on-ground reporting. ThePrint – with exceptional reporters, columnists and editors – is doing just that.

Sustaining this needs support from wonderful readers like you.

Whether you live in India or overseas, you can take a paid subscription by clicking here.

Support Our Journalism

19 COMMENTS

  1. Why we are all worrying about Economy at this time of Crisis , when our life is at stake ?? Every Nation will suffer the same . Cant we people be little sensible enough to realise that if we dont survive then what’s the point of thinking about Economy?? Economy doesn’t only depends on Government but also on the Citizens as well . How Hard u are working matters the most .
    And the UPA Govt given so much of loose in the Loan Regulations that many of the payees didn’t paid their debts and they were all ignored . It’s a result of the past . Not of the present or NRC , CAA or etc.

    Let’s Stand United by keeping aside our Ideologies .
    After all We are all Hindus (People of Hindustan).

  2. Country locked down since 25th of March 2020.. Only 7 days lockdown during 1st quarter brings gdp growth to that extent. ?

  3. We are all in a mess… Our Government thinks only after acting…. be it DEMONETISATION.. or GST… or CAA … or NRC…what else can we expect… from these Gentlemen…

  4. This Thug Chokidar chor hai thinks that no
    body in universe is intelligent then him in respect of cheating people & spreading Jumlas.He does not considers any famous economist of HARWARD as he him self is hard worker in respect of to fool people he him self can manage NITI AYOG without the help of any award wining Economics.Jai ho Thug Chokidar chor hai.

  5. It was the responsibility of Niti Aayog to stop show-off projects like Statue of Unity but they failed to do that. I was surprised to see that senior members knew more about Ramayam and less about development economics.

  6. I really didn’t expect Print to be twisting headline. It’s clearly not what he said, and the headline has been handpicked to grab eye balls.

    Lets avoid this, Sanya.

  7. current extra ordinary situation of pandemic may case global GDP to zero.. It will affect India as well..

  8. We have a way ng in Malayalam which translates as “Only if there is a wall there can be a paint”
    GDP and growth Gurus always take for granted that human life will always exist. Today that theory has been punctured. I always wondered that modern present day human consumes so much in terms of energy, food, natural resources, pollutes a ton in air, in sky, water and soil, yet never in peace.
    Life existed on earth for lakhs of years. The average human would live for 50 yrs approx. He would eat what was available and his actions had no impact on earth and he died.
    Only in the past 150-200 yrs post industrial revolution has man ravaged the earth from drilling for oil, blasting for ore, littering the sea with oil and thrash, blackening with sulphur the air around, wiped off species and bio diversity.
    This 21 days are for earth. Not fully, but at least in some part.
    Too many of us on the planet consuming ever more. We cannot sustain the earth with this.
    Think about it as there are human generations waiting to come. We should pass on to the next in the shape and form we recieved it in or may be better, never worse.
    GDP ain’t a measure of human wellness, please find an alternate composite mix that includes how greeen is your neighborhood, how clean are our water bodies and air we breathe, that includes species and bio diversity, that includes the immune system of man, that includes lack of human conflict both inter and intra.
    GDP is a western concept which has built in wastage, let’s create a new measure. And in this new measure perhaps there would be surprise entrants. Perhaps they know the secret of harmonious living.
    We have only borrowed the time and facilities of earth from next generation. We are dutybound to return it in its purest form.
    GDP can wait. Let human and earth regain and rebound.

    • You are right ; botched up functioning is because of Modi. We have seen that time and again. He botched up 114 Rafale procurement, then demonetisation, then GST

  9. Narendra Modi quickly disbanded the PLANNING COMMISSION soon after he came to power, as if he had some great vision and blue print for the country’s development. He had none. His much hyped brain child the NITI AYOG has almost proved still-born. This gentleman Rajiv Kumar and his colleague / predecessor one Mr Kant didn’t have the foggiest idea of what to do, nor did the much powerful PMO or the boss of PMO, the PM himself. They only knew how to celebrate Diwali the night the GST was launched by magnificently illuminating the Parliament building, only because Nehru had illuminated that building in that fashion the night India had won independence. Modi was at par with Nehru, the world had to know. Now this coronavirus thing is a god-sent excuse for all of them to hide behind. Hasn’t GST done what this virus might do? Mr Rajiv Kumar says that because of it, the growth will be zero or negative; wasn’t it headed precisely in that direction even before this virus emerged? That is a moot question.

    • To the point Sanjiv. Who will explain this to the people who are misguided to the tune that Modi is Avatar of Vishnu. Actually this guy is simple bad luck for India in every sphere.

    • Is human life more important than GDP? If you think yes then I have nothing to say you . Most countries GDP will be zero or negative this quarter .

Comments are closed.

Most Popular

×