CEA Subramanian said that India can achieve a 6% GDP growth in FY21 as coronavirus will have much effect on the economy.
As coronavirus is being seen as a major blow to the already sagging Indian economy, Chief Economic Adviser Krishnamurthy Subramanian has said that the virus epidemic will not have much impact on the next fiscal’s economic growth. CEA Subramanian also said that India can achieve 6 per cent GDP growth in FY21. However, he also mentioned that India may take some more time to reach 7 per cent growth. On coronavirus, he added that he sees an opportunity in expanding exports. Experts believe that industries such as pharmaceuticals, chemical, textiles, have a huge opportunity to make their mark amid a slow competition in South Asia.
On the back of a rapid increase in the cases of coronavirus worldwide, the estimates of economic growth have been substantially lowered. UN’s trade and development agency (UNCATD) said that the coronavirus outbreak could cost the global economy up to $2 trillion this year and it also warned that shock from the epidemic will cause a recession in some countries and depress global annual growth to below 2.5 per cent.
Amid a rising uncertainty about the magnitude of impact, major economies are also considering rate cuts to boost demand. Last week, the US Fed Reserve cut the interest rates by 50 basis points, which was against the market expectation. “The spread of coronavirus has brought new challenges and risks to the financial market and the magnitude and persistence of the overall effect on the economy remains highly uncertain,” said Federal Reserve Chair Jerome Powell.
However, the RBI has maintained the status quo on interest rates in the last two Monetary Policy Committee meet after five straight cuts of 135 points altogether in 2019. RBI Governor Shaktikanta Das had said that the Reserve Bank is ready to face the situation.