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Indian Economy Has Bottomed Out; Formal Sector May Get Back To Pre-Covid Level By This Year-End: Montek

The Indian economy grew by a record 20.1 per cent in the April-June quarter, helped by a very weak base of last year and a sharp rebound in the manufacturing and services sectors in spite of a devastating second wave of COVID-19 case.

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The Indian economy has bottomed out and the formal sector is likely to get back to pre-pandemic levels by the end of this year, former deputy chairman of erstwhile Planning Commission Montek Singh Ahluwalia said on Thursday.

Addressing a virtual event, Ahluwalia said he is in favour of the National Monetisation Pipeline (NMP) that will look to unlock value in infrastructure assets across sectors ranging from power to road and railways.

"One of the main positives is that the economy has actually bottomed out. And the formal sector may be getting back to pre-pandemic levels by the end of this year, it will be different for different sectors, service sectors, etc," he said.

Ahluwalia opined that if the formal sector sees economic rebound, then the informal sector will also follow it, adding that a healthy economic rebound happens, when private sector investments also pick up.

The Indian economy grew by a record 20.1 per cent in the April-June quarter, helped by a very weak base of last year and a sharp rebound in the manufacturing and services sectors in spite of a devastating second wave of COVID-19 case.

The Reserve Bank of India (RBI) has lowered the country's growth projection for the current financial year to 9.5 per cent from 10.5 per cent estimated earlier, while the World Bank has projected India's economy to grow at 8.3 per cent in 2021.

On recent measures by the government with regards to infrastructure, Ahluwalia said," I am in favour of NMP, if it is properly done then it will be a good thing."

Last month, Finance Minister Nirmala Sitharaman had announced a Rs 6 lakh crore National Monetisation Pipeline.

Replying to a question on reforms in the agriculture sector, he said modernisation of agriculture is desirable.

"But the way it (implementation of three farm laws by the Centre) was handled, it created a huge amount of doubt and suspicion (among farmers)," Ahluwalia opined.

Hundreds of farmers, mainly from Punjab, Haryana and western Uttar Pradesh, are camping near Delhi's borders since November last year demanding that the Centre repeal the three contentious farm laws.

The government and unions representing farmers, who have been camping at Delhi's border in protest against the three laws that they say will end state procurement of crops at MSP, have held 11 rounds of talks, the last being on January 22. Talks broke down after widespread violence during a tractor rally by protesting farmers on January 26.

Enacted in September 2020, the three farm laws have been projected by the Centre as major reforms in the agriculture sector that will remove the middlemen and allow farmers to sell their produce anywhere in the country.

The protesting farmers, on the other hand, have expressed apprehensions that the new laws would pave the way for eliminating the safety cushion of the minimum support price and do away with the mandi (wholesale market) system, leaving them at the mercy of big corporates. 

(PTI)


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