File Picture
The GDP numbers being projected by the World Bank and IMF for India are far “too optimistic” and the country would require additional expenditure of Rs 10 lakh crore to bring the coronavirus-hit economy back on track, said Former chief economic adviser Arvind Subramanian.
“The number given by the World Bank and IMF in terms of the changes are way too optimistic because even if we lose one month’s output, we are talking about pretty negative rate of growth and that is what should determine how we respond,” Subramanian said in a webinar organised by economic think-tank NCAER.
As per the World Bank’s latest assessment, India is expected to grow 1.5 per cent to 2.8 per cent during the current fiscal due to the impact of the COVID-19 pandemic and consequent lockdown.
Similarly, the IMF on Tuesday projected a GDP growth of 1.9 per cent for India in 2020, as the global economy hits the worst recession since the Great Depression in the 1930s.
With these subdued projections, India is likely to record its worst growth performance since the 1991 liberalisation of the economy.
“We are going to experience a sharp collapse in output for one month. We have to spend 2 per cent on medical side which is slightly underestimated… For one month output loss even if we make up one third of output loss by social cushioning or propping up financial system, still it would be 3 per cent of GDP. So the number we came up with Rs 10 lakh crore (Centre and states combined) or 5 per cent of the GDP,” he said.
