Economic growth will come into positive territory only by March or June quarter 2021, but India will have to turn the crisis into an opportunity by introducing reforms, Nilesh Shah, a part-time member of the Economic Advisory Council to the Prime Minister, said on Wednesday.
‘Future drives equities’
Mr. Shah, MD, Kotak Mahindra Asset Management Company, attributed the surge in equity markets to the optimism they get by looking at the future and not at the data of the past.
India’s GDP contracted 23.9% year-on-year (y-o-y) in the June 2020 quarter, which saw COVID-19 lockdowns, making the country one of the worst performers across the world during the pandemic. At the current level, it looks like the March 2021 quarter or June 2021 quarter will show y-o-y positive GDP growth, Mr. Shah said, speaking at a webinar organised by professional networking platform Linkedin. He hinted that GDP will be hit by the pandemic for two years but stressed that the country needed to take advantage of the challenging situation, just the way it did in 1991 during the forex crisis which put growth momentum in a new orbit.
He added that companies wanted to shift out of China and that India ought to roll out the red carpet for them while also cutting red tape.
The cost of logistics, which makes Indian goods uncompetitive at the global level, has to be reduced. Besides, the cost of power has to go down as subsidised supply to farmers makes it expensive for industry to get electricity, he said.