he Indian economy may contract or stagnate this fiscal but it will bounce back to be among the fastest growing in the world next year, Finance Minister Nirmala Sitharaman said.
Demand revival and the government’s focus on infrastructure, agriculture and related sectors, along with support to sovereign funds and pension funds will drive economic growth, she said at the India Energy Forum by CERAweek. The highest level seen in manufacturing PMI since 2012 signalled revival, she said.
“If that sustainable revival is going to happen between the third quarter and the fourth quarter, we expect that the overall GDP growth, notwithstanding the pandemic … even if it’s going to be negative or zero this time, the next year will be clearly India seeing itself as one of the fastest growing economies. So, we are looking at that kind of trajectory, and indicators show that the primary sector, related sectors or agriculture and rural India are all doing very well,” the FM said.
Sitharaman said demand for durable goods, agricultural equipment, tractors, vehicles are all going up in India. “The festival season has commenced in India, as a result of which I expect the demand to go up, and therefore be sustainable also,” she said.
Infrastructure spending is the government’s top priority, she said. The sector is attracting domestic and foreign funds, she added.
The government is also focusing on creating infrastructure to support export of surplus grain and vegetables, she said.
“Again, this is related to infrastructure, but making sure that India’s surplus foodgrains and vegetables are all going to be intact and fresh to be exported (with) the primary intention of making Indian agricultural exports on a very high trajectory,” the finance minister said.
The government is also encouraging foreign funds. “Any of the sovereign funds which would want to come in for investments, are being given several taxation-related concessions. I recently met up one of the high commissioners from one of the countries whose funds are today looking to having the benefits given for other pension funds and sovereign funds. So, we are happily welcoming funds which want to benefit from that tax exemptions that we have given them.”
The finance minister said investment in efficient and clean energy was another focus area of the government. These included the country’s ambitious plan to expand clean energy generation, incentives to produce ethanol from stored grains and incentives to use biomass to produce energy.
The country is also looking at buying fields outside India to have a voice in price determination, she said. Opening up of the nuclear energy sector to private participation was another major step the government had taken, she said.