GROWTH SHOULD PICK UP FROM SECOND HALF OF THE FISCAL

India's economy is expected to shrink in FY21. The government has come out with several reforms of late to make the country a global manufacturing hub and push jobs and growth. Niti Aayog CEO Amitabh Kant, while speaking with Business Today’s Nirbhay Kumar, says that foreign companies are strongly considering the possibility of shifting manufacturing to India given its low costs and a huge market. Kant talks about plans to attract foreign investment, boost local demand and reforms kick-started by the government. Edited excerpts:

- Nirbhay Kumar

India’s economy is expected to shrink in FY21. Most economists predict India will enter recession by September. What is your assessment?

Not just India, but the world economy will shrink in FY21. However, most analysts estimate the fallout in India will not be as severe as in other countries. In April, the International Monetary Fund had stated the Indian economy will grow in FY21, albeit at a slower pace. Even high-frequency indicators, such as the Purchasing Managers Index (PMI), showed improvement between April and May. June might be better, given that the economy is opening up. If India does see a full-year recession, it is not likely to be very deep, and we should see the economy bounce back in the next fiscal.

In which quarter do you expect India’s GDP to start growing instead of shrinking?

We have started opening up the economy over the past month. As more data starts flowing in, we will be able to make an informed assessment of growth prospects. Early indications from PMI data suggest contraction in manufacturing and services may have bottomed out. The PMI services index fell to 5.4 in April, and touched 12.6 in May. Business optimism for the year ahead remains positive, as recorded by these surveys. In my opinion, we should see growth starting to pick up from the second half of this fiscal.

What has stopped the government from taking demand-stoking measures instead of working on the supply side?