Eco growth will turn positive by Q1FY22: EACPM member Shah
Mumbai: The economic growth will come into positive territory only by March or June quarter 2021, but India will have to turn the crisis into an opportunity by introducing reforms, Nilesh Shah, a part-time member of the Economic Advisory Council to the Prime Minister, said on Wednesday.
Shah, who is the managing director of Kotak Mahindra Asset Management Company, attributed the surge in equity markets to the optimism they get by looking at the future and not at the data of the past.
India's GDP contracted 23.9 per cent year-on-year (yoy) in the June 2020 quarter, which saw COVID-19 lockdowns, making the country one of the worst performers across the world during the pandemic.
At the current level, it looks like March 2021 quarter or June 2021 quarter will show y-o-y positive GDP growth, Shah said speaking at a webinar organized by professional networking platform Linkedin.
He hinted that GDP will be hit by the pandemic for two years but stressed that we need to take advantage of the challenging situation, just the way we did in 1991 during the forex crisis which put the growth momentum in a new orbit.
Shah said companies want to shift out of China and that India ought to roll out the red carpet for them and also cut the red tape.
The cost of logistics, which makes Indian goods uncompetitive at the global level, has to be reduced. Besides, the cost of power has to go down as subsidized supply to farmers makes it expensive for the industry to get electricity, he said.
Drawing from mythology, Shah compared the condition of an entrepreneur in the Indian context with that of the character Abhimanyu in Mahabharata and said the market forces are akin to the Kauravs while the role of Pandavs is played by the regulation, infrastructure support and policies.
Commenting on the surge in markets, he said while the past is about lockdowns, the future is about reforms which will change the growth orbit of India and markets are reading into the same.