According to the report, the likely lower support will be caused due to Centre’s efforts for fiscal consolidation.
Notably, the report pointed out that
“While the fiscal deficit would remain above 3% of
“The faster the fiscal consolidation, the lower would be the fiscal support toward economic growth and vice-versa. It could take many years for the general government to bring its debt-to-GDP ratio (at 86% of GDP in 2QFY21) back down to pre-COVID levels (of 68%).”
As per the report, the growth in the 2000s decade was led by investments, while consumption was the key driver in the 2010s decade.
“The 2020s decade could be seen as the ‘Healing Decade,’ wherein all efforts are toward just one objective – to regain lost economic strength.”
“If, however, this healing does not happen, it is very likely the economy would continue to crawl sideways – with some years of decent growth and some years of weak growth – leading to subdued average growth.”
Besides, the report cited that Covid impacted 2020 led to extreme behaviors, pushing financial savings sharply higher, this would start reversing from 2021 as things begin to normalise.
“Whether Indian households would keep their financial positions healthy is an important prerequisite for better growth performance over the long term.”
“As households and the government remain cautious on spending and repair their
Accordingly, the improved balance sheets of economic participants – along with sustained improvements in some key areas such as revival in real estate and manufacturing would set the stage to move from low to high-single-digit growth before the end of the 2020s decade.
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