GDP growth for Q2 FY 21 reads good, but on ground realities differs leading to K-shape recovery- Read more

The GDP data flashed for Q2 FY 21 and projections for FY 22 read to be good, but the ground reality is that many sectors are still reeling under the pandemic’s after-effects, particularly MSME and few of the Services sectors. These sectors are witnessing a K-shaped recovery and need hand holding by the Government and RBI to pull it out from trap and get back on growth trajectory. Intervention in the form of fiscal stimulus as also growth catalyst factors need to expedite, as they are crucial for complete economic growth.

Significant emphasis on the need for easy and low interest credit also needs a massive push in government expenditure and infrastructure development to catch up with growth levels of top performing global economies. The Indian economy needs domestic consumption driven growth and not just export oriented growth. Stimulation of demand is required regardless of the possibility of fiscal deficit; the efforts should be to augment aggregate demand. Private consumption is an integral component of India’s overall GDP and is key to a robust climb back from the depths of market fall.
 

Rental real estate will be a game-changer, impacting GDP growth in a major way as also supporting investments. For this, Standard Deduction for rental properties should be increased to 50 per cent. Input tax credit on GST in residential and commercial leasing will also boost the sector. The cascading effect this will have on GDP growth will lead to inclusive employment numbers. Issues like crude oil price hike and inflationary pressure, the impact of the new Omicron variant as also low bank credit growth need to be closely monitored, even as the Government of India enhances efforts to support the economic recovery.