'Multiple greenshoots in economic recovery': 15th Finance Commission chairman NK Singh

Amid the COVID-19 pandemic which has caused a severe blow to the financial system of countries across the world and that of India to an extent, Fifteenth Finance Commission Chairman NK Singh on Friday asserted that government should rather concentrate on the revival of the economy instead of focusing on debt and fiscal consolidation which should come up for discussion after an economic rebound in coming years.

“This is not the time to talk of fiscal consolidation. This is the time in which the world believes, I think that what needs to be protected is the expenditure over fiscal deficit and this is exactly what the central government has done. This year we must not concentrate on the fiscal or the debt. We must concentrate on the fastest possible revival of the economy. We must concentrate on ensuring that in terms of the painful transition. The pain is minimised in multiple interventions and multiple interventions have taken place,” he said while speaking with media after the meeting of the commission with the economic advisory council.

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On a brighter side, Singh also hinted that the economy is showing signs of recovery by stating that there have been "multiple green shoots" in the recovery process.

A fairly rapid resumption of both employment and economic activity suggest that the recovery process is underway, and employment numbers have gone up very sharply, said Singh.

Also, the agriculture sector has been the least affected said Singh, adding that the sectors boost would be instrumental to the revival process of the economy, Singh opined.

He also asserted that FDI flows continue to be modest and there has been a sharp recovery in the auto sector.

"There are multiple greenshoots, covering various sectors of the economy such as agriculture, manufacturing and essential services,” Singh said while speaking with media.

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Stating that nothing suggests that India’s medium-term economic growth potential has been damaged, he said the commission would deliberate on which financial year is to be taken as ‘base year’ for the purpose for making projections for the five-year period.

“Historically, the finance commissions for making projections has used the year in which they make the award as the base year. This year on account of extraordinary factors using the current year in which we are as the base year have got many challenges,” Singh said.

One of the suggestions by the advisory panel was to overlook the present year and choose the following year (2021-22) or keep an eye on the second-quarter results to make projections, said Singh adding that growth momentum is likely to increase in the medium term and there would be sharp recovery next year.

International agencies have projected growth to shrink by around 4-5 per cent this fiscal but recovery to 8-9 per cent next fiscal, mainly on account of a low base.

(With PTI inputs; Image credit: PTI)