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3rd Covid-19 wave unlikely to hit Indian economy hard, says CEA Subramanian

3rd Covid-19 wave unlikely to hit Indian economy hard, says CEA Subramanian

CEA KV Subramanian says around 40% adult population has received first Covid vaccine dose, while 67% adults exposed to the virus -- as per Sero Survey India -- may be close to herd immunity

CEA KV Subramanian CEA KV Subramanian

Chief economic advisor KV Subramanian, FICCI 18th Annual Capital Markets Conference, CAPAM 2021 today, said the economic impact of the third Covid-19 wave may not be that "deep".

He said around 40 per cent of the adult population has received the first dose of the Covid-19 vaccine, while 67 per cent of adults exposed to the virus -- as per Sero Survey India -- may be close to herd immunity.

On inflation/GDP, CEA said inflation will remain moderate in coming months. "Expect inflation to remain within RBI tolerance limit. Global inflation will remain high this year. FY22 GDP will remain around the Economic Survey projection of 11 per cent," he added.

Also read: Fiscal stimulus, vaccines scaled up US economic growth in second quarter

Subramanian said last year, India had a V-shaped recovery and looking at the last four quarter numbers during the pandemic, India is the only country that has registered two consecutive quarters of growth. He also expressed hope that India should be able to hit a high growth rate through a higher investment rate and more productivity from privatisation, increase in exports. “This decade will be a decade of really high growth for India,” he added.

On the fiscal deficit and capital expenditure, he said, “I don’t anticipate either breaching of fiscal deficit target or cutting down on expenditure. Some pruning on revenue expenditure has already started but not on CAPEX as it is important for sustained recovery,” he noted.

Also read: Second wave may have more lasting damage on economy: Moody’s

Speaking on the impact of the second wave, Subramanian said the GST numbers also reflect a rise in consumption since it is a consumption-based tax. “Every month, starting from September, the GST collections were at least Rs 1 lakh crore but it was Rs 92,000 crore in June, which indicates that the impact of the second wave was not as pronounced as that of the first wave,” he added.

Also read: How India can become a cashless economy