Indian economy back in the green, says DEA secretary Tarun Bajaj

By next year, sovereign bonds to be part of global indices

The Indian economy is now growing at a slight margin over the previous financial year on a year-on-year basis, after showing a decline in the rate of India’s gross domestic product contraction in the second quarter of FY21, said Economic Affairs Secretary Tarun Bajaj on Friday. Also by next year, sovereign bonds will be the part of global bond indices as the government is working on structuring such papers for overseas investors, he said.

 Referring to the Reserve Bank of India’s revised estimate of small growth in the third and the fourth quarters of FY21, the secretary said the government is hoping for robust growth next year, too, on base effect. “The pandemic has taken the sheen off this year, however, we are recovering from it and even crossing the 2019-20 growth figures by a slight margin,” Bajaj said in a panel discussion organised by Confederation of Indian Industry (CII).

The RBI has projected GDP to grow at "0.1 per cent in Q3 and 0.7 per cent in Q4 of FY21, while 21.9 per cent to 6.5 per cent in H1of FY22, with risks broadly balanced.”

About strengthening the bond markets, he said that the government is working on the inclusion of Indian sovereign bonds into the global bonds indices. “We hope that it should happen next year and this will definitely help,” he said.

Besides, the government has constituted a committee to do the valuation of the bonds in the markets. Both Securities and Exchange Board of India (Sebi) and RBI have eased regulatory framework for the bond markets and even relaxed the foreign portfolio limit investment, he noted.

About the reforms, Bajaj said such measures would continue and in the Union Budget, there would be a greater emphasis on production-linked schemes.

On capital expenditure, the secretary, Department of Economic Affairs, said capex has improved since November and that it is up 15 per cent year-on-year basis; government expenditure is also up by 5 per cent.

Recognising the importance of private equity deals, he said India reported Private Equity funds recorded investments worth $45 billion in 2019, when more than 1,000 such deals happened.

He further said the government’s asset monetisation and disinvestment drive was going on aggressively and added that asset monetisation, particularly in sectors such as power, shipping, ports, and warehouses, was underway and would soon be concluded.

He said that the government has been putting greater attention on infrastructure as it has committed to invest $1.5 trillion in the next five years.

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