India’s gross domestic product (GDP) will contract in the first quarter, but is likely to grow 2% for the entire financial year, said Chief Economic Advisor KV Subramanian. In an interview to ET’s Gaurav Naronha and Deepshikha Sikarwar, he said that a provocation is expected “soon”.
What is your assessment of the economy?
This is an extremely uncertain period. The global financial crisis was a period of uncertainty but that was all completely economic phenomena, so one could make estimations. Here the economic impact is clearly tied to the pandemic as well and the health side, so its far harder to estimate. There is a lot of uncertainty, unknowns that we are dealing with. With that caveat, I would say that if you look at the previous pandemic of this order, which was the Spanish flu of 1918, it was a far more devastating pandemic because the percentage of infected people was 33%. As of now, in Covid-19, the number is still less than 1%. The mortality rate was 10% in the Spanish flu, its about 3.4% globally for Covid, so one-third of the mortality rate. Despite there was a V-shaped effect in the output, so a decline followed by an increase. So, the overall growth rate for the medium to long run actually stayed.