Economy hit by COVID-19 second wave to start recovering from July, says Chief Economic Advisor

“The second wave of COVID-19 has affected the momentum of economic recovery. We expect a recovery in the economy from July. Now, several states have started removing many restrictions and if we speed up the vaccination drive in our country, our economy will start recovering,” Subramanian told ANI.

Talking about the ongoing COVID-19 vaccination drive in the country, the Chief Economic advisor said, “India will be able to achieve vaccination for all by December. If we vaccinate people in three shifts each day, then, we can vaccinate 1 crore people in a day. This is definitely ambitious, but not impossible. I have taken both doses of vaccine and appeal to all to get themselves vaccinated as soon as possible.”

Responding to a question on the predicted third wave of COVID-19, the Chief Economic Advisor said that the ongoing vaccination drive can significantly ‘lower down’ the impact of the pandemic. “Thus, the more people are vaccinated, the more it will lower down the impact of the third wave and will not be as harmful as expected”, he pointed out.

Subramanian said that COVID-19 is not going to impact our fiscal deficit target and disinvestment target.

In this year’s Union budget, Finance Minister Nirmala Sitharaman has announced a fiscal deficit target of 6.8 per cent for 2021-2022. The government has set Rs 1.75 lakh crore disinvestment target from stake sale in public sector companies and financial institutions, including 2 public sector undertaking (PSU) banks and one insurance company, in the next fiscal year.

Answering a question of whether the government is thinking of any new stimulus package like last year, he said, “There was not any provision of a pandemic in last year’s Union budget, because we have seen the pandemic after the last year Union budget. This year, the budget has a provision for the pandemic. The budget has the provision of expenditure in the infrastructure and construction sector.”

“Amid this pandemic, India has not spent much on infrastructure and construction. As and when the situation improves, govt will start spending as per the provision of the budget. The government is also assessing the situation. If required, the Centre is ready to do so,” he said.

Commenting on the stock market situation in the country, he said that the stock market is at a record high as investors believe that the Indian economy will do well.

The CEA said that the prediction of good economic growth and investment by developed nations in the Indian stock market has led the market to a record high.