India covid-19 economy Government India

NCAER projects Indian economy to grow at 1.3% in FY21

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₹4.2 trillion for the current year. The base case also incorporates additional borrowing headroom provided to Indian states up to 2% of GDP.

The contingent liabilities arising out of government credit guarantees for lending to MSMEs etc. have also been reflected in the public debt component.However, NCAER built alternative scenarios where the supply response is varied from contraction of 10% of GDP to zero growth. “We also examine a base scenario where the stimulus measures are allowed to work themselves out without any supply constraint, resulting in positive growth of 1.3%.

However, the ground reality is that the economy is currently subject to very severe supply constraints because of increased mortality of businesses, especially MSMEs,.

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