New Delhi: The Indian economy is likely to contract in the range of 5-7.5 per cent this fiscal but will see a growth of 9 to 11 per cent in FY 2021-22, former chief economic adviser Arvind Virmani said on Friday. Addressing a virtual event organised by industry bodyPHDCCI,Virmani said in the upcoming Budget, the government should come up with policies to accelerate India's economic growth.
"In the post pandemic Budget, policy reforms (are) needed for accelerating India's economic growth…," he said adding that the economy is likely to contract to 5 per cent to 7.5per cent in FY2020-21 and grow9-11 per cent in the next fiscal," he said. The Union Budget for FY2021-22, the eighth of the Narendra Modi-led government, is scheduled to be presented in Parliament on February 1, 2021.
Finance Minister Nirmala Sitharaman will be presenting her third Budget. The Reserve Bank of India (RBI) has projected the Indian economy to contract 7.5 per cent in the current fiscal while the National Statistical Office (NSO) estimates the contraction at 7.7 per cent.
Virmani further said that India can't become'Aatmanirbhar' with the 20th century Direct Tax Code (DTC). "There is a need tosimplify direct taxes and indirect taxes for MSMEs. We can't have 21st century Aatmanirbhar with 20th century DTC… We need 21st century Direct TaxCode," he said.
The eminent economist also emphasised that there is a need of 15 per cent uniform GST rate for 75 per cent of goods and services. Noting that production-linked incentive (PLI) was actually a very good scheme, Virmani said the government should promote employment generating exports.
Virmani also pointed out that free trade agreements (FTAs) with the US, European Union (EU) and the UK are much important than with the Regional Comprehensive Economic Partnership (RCEP) because most MNCs are located in the US, EU and the UK. He also suggested that the government should spend more on infrastructure projects, modernise sewage system to deal with the future pandemic and invest onR&D on contagious diseases.