` ` 7/2020 INDIA Contact: Rajesh Nath, Managing Director Please Note: Jamly John, General Manager Telephone: +91 33 40602364 1 trillion = 100,000 crores or Fax: +91 33 23217073 1,000 billions 1 billion = 100 crores or 10,000 lakhs E-mail:
[email protected] 1 crore = 100 lakhs 1 million= 10 lakhs The Economic Scenario 1 Euro = Rs.82 Economic Growth India's economy will spring back to normal sooner than expected and may even make a sharp V- shaped recovery in the next financial year as per the Finance Ministry, dismissing forecasts of a sharp contraction in GDP in the current fiscal. Monetising of the fiscal deficit by the RBI was not currently on the table. Direct and indirect tax collections in the June quarter were encouraging and daily e-way bill data is also showing a positive trend. All these developments are actually giving an encouraging signal that the economy is coming back to the rate sooner than what was being anticipated. If the current uptick continues without additional shocks, the sharp contraction forecast by several agencies for the current fiscal won't come to pass. Localised shutdowns on account of Covid-19 outbreaks have prompted the further lowering of GDP estimates. It is expected that there will be a 9.5% contraction in GDP in the current year against its initial 5% shrinkage estimate, citing a setback to the recovery seen in June due to the mini lockdowns. The government was open to borrowing more to boost spending on infrastructure but monetising the fiscal deficit by the RBI was not under consideration.