The Indian economy could contract as much as minus 0.9% in FY21 if the covid-19 crisis prolongs and the Union government is unable to restore economic activity, said Confederation of Indian Industry (CII) in a report released on Thursday. The lobby group also urged the government to initiate structural reforms to revive the economy over medium to long-term. “In the base case, GDP growth is estimated at a negligible level of 0.6% while in the optimistic scenario it is projected at 1.5%. In the downside risk scenario, where the pandemic outbreak gets prolonged, thereby restricting full restoration of economic activity for an extended period, the GDP growth for FY 2021 could possibly contract by as much as -0.9%,” the report noted. CII also said that a comparison with major G-20 countries shows that India’s debt level is not that high and the government has room to provide more incentives. It also mentioned that the government’s fiscal stimulus so far is small compared to many other countries.

(Live Mint)