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COVID-19: India's will grow @1-2% in Q1FY21, says Chief Economic Advisor

Since COVID-19 has brought the economic activities in India and the world to a virtual standstill, the country is expected to grow at the rate of 1-2% in the first quarter (April to June) of FY21

New Delhi: India's Chief Economic Advisor (CEA) KV Subramanian has speculated India's growth for the first quarter (April to June) of FY21 to be at 1-2%. Subramanian said on Monday that the GDP growth in the in Q1FY21 is likely to hover between one to two percent. The main reasons for this, of course, are the COVID-19 crisis and subsequent lockdown which has brought most economic activities to a virtual standstill in India.

However, In the Q2 of FY21, the economy could pick up as industries restart their operations with the streamlining of supply chains and migrant workers getting back to their jobs, said the CEA.

Subramanian further said that at this moment it is difficult to give an idea of possible job losses due to the lockdown due to lingering uncertainty. However, good companies are likely to retain most of their workforce and with minimum wage cuts, as they resume operations, he told the news agency ANI.

KV Subramanian further added that the global economic scenario is weak and that is going to cause an impact on Indian exports.

"It is, however, time for Indian industries to revamp their strategies, adopt modern technologies and gear up to compete in global markets as many multinational corporations look towards shifting their manufacturing base out of China," he said.

The Chief Economic Advisor also said that India has to consider its own ground realities while giving economic stimulus packages to Indian industry, rather than copy the models of western countries like Britain and the United States.

Subramanian said Indian cities provide a fertile ground for migrant workers where they can expect good working conditions and lifestyles, a reasonable education and healthcare facilities compared to their home towns.

Speaking on the bear-bull show of the stock market the CEA said the current volatility in the share market does not reflect strong fundamentals of the Indian economy. The markets ride on sentiments of investors who look for near-term profits in high-growth areas.