Indian economy on an ‘upswing’: Panagariya

The eminent economist described the government’s decision to privatise two public sector banks next fiscal as an “unprecedented” effort to “finally right a wrong done 50 years ago.” He was apparently referring to former Prime Minister Indira Gandhi’s move to nationalise banks. Panagariya, who is currently a Professor of Economics at the Columbia University, said the country’s GDP growth in October- December 2020 quarter returned to a hair’s breadth above its level a year ago. 

“At 0.4 per cent, the year-on-year growth in GDP may seem low but given the large negative growth during the preceding two quarters ((-)24.4 per cent during April-June and (-)7.3 per cent during July-Sept), the quarter-on-quarter growth momentum is very strong,” he said. According to him, there are signs the government is clearing past arrears at an accelerated pace and has also provided for doubling of government expenditure in the current quarter over the same quarter last year. 

“These facts would help boost demand and give further impetus to growth at a time when the economy is on the upswing... So the news on the growth front is very encouraging,” he said. To a query on whether it will be feasible now for India to achieve the target of becoming a $5 trillion economy by 2024-25, he said given the unexpected COVID shock, “we may have to wait a year or two longer.”