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India’s macroeconomic fundamentals are much stronger, and the country is all set for robust growth on the back of structural reforms, the government’s capex push, and rapid vaccination, Chief Economic Adviser KV Subramanian said on Tuesday.

Briefing media on the growth number, he said the GDP data for the first quarter reaffirms the government’s prediction of an imminent V-shaped recovery made last year.

India’s economic growth surged to 20.1 percent in the April-June quarter of this fiscal, helped by a low base in the year-ago period, amid a devastating COVID-19 second wave.

The gross domestic product (GDP) had contracted by 24.4 percent in the corresponding April-June quarter of 2020-21, according to data released by the National Statistical Office (NSO) on Tuesday.

Subramanian said the growth during the current fiscal would be higher than the pre-pandemic level, and the GDP growth should be in line with the projection made in the latest Economic Survey.

Supply-side push

Despite the second wave of COVID-19, he expressed hope that the economic growth during the current financial year would be around 11 percent.

The Economic Survey 2020-21, released in January this year, had projected GDP growth of 11 percent during the current financial year ending March 2022.

The survey had said growth will be supported by a supply-side push from reforms and easing of regulations, push for infrastructural investments, boost to manufacturing sector through the production-linked incentive (PLI) schemes, recovery of pent-up demand, increase in discretionary consumption after the rollout of vaccines and pick up in credit, given adequate liquidity and low-interest rates.

The CEA further said India is poised for stronger growth on the back of structural reforms, capex push by the government, clean up in the financial sector, and rapid inoculation that will help revive the contact-intensive service sectors.

The banking sector has now developed a cushion to withstand impending bad loans, he said, adding the net profits of public sector banks (PSBs) increased to Rs 31,816 crore in 2020-21.

Calibrated policy measures

On the inflation, he said it has witnessed a moderation in July compared to the previous month.

“Our expectation is that the inflation in the next few months should be within that range between 5-6 percent, but less than 6 percent” despite hardening global commodity prices, he said.

Very calibrated monetary policy measures and the supply-side measures that have been taken by the government would keep the inflation in that range, he added.

He expressed hope that the household consumption should pick up as the inoculation drive is proceeding at a faster pace.

As the fear of pandemic recedes, he said, the consumption should gather momentum as was witnessed during the previous fiscal.