Growth risks

India needs reforms to enhance productivity

The Reserve Bank of India’s (RBI’s) Annual Report, released on Tuesday, reiterated the monetary policy committee’s assessment that gross domestic product would shrink in the current fiscal year. While economic activity is recovering with relaxation in lockdown, a substantial increase in government spending in the first quarter is likely to have provided some relief. In this context, the report rightly notes that the fiscal policy in the future is likely to be conditioned by the large debt overhang and contingent liabilities accumulated during the pandemic. A credible plan for reducing debt and deficit would be required. Thus, it would be