Economy shrinks, IMF on V-shaped recovery

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April 22, 2020, The Liberacy:- Economy might be the only worry that will be haunting governments and the people, post the pandemic era. International Monetary Fund (IMF) has estimated the Indian economy to shrink by 0.5%.
In the last budget, the Ministry of Finance, Government of India, presented the growth rate of its GDP by 5% (lowest in the last 10 years) and predicted it as 6.5% for the year 2020-21.
However, with a fiscal deficit of 3.3% and the work stop by the pandemic, the predicted figures look like an imaginary world.
The government of India has announced a total of 40-day lockdown. That means, no work in these 40 days. Except for some of the essential service and service sectors who can work from their homes.

Economy shrinks, IMF on V-shaped recovery
Economy shrinks, IMF on V-shaped recovery

The wide gap between the receipts and the expenditure of India, never allowed to lower the fiscal deficit. Fiscal Consolidation always seemed to be a hoax even after the FRMB act 2003 and FRMB 2.0.
FRMB 2.0 targeted the Fiscal Deficit at 2.5%, Revenue Deficit, and Effective Revenue Deficit at 0% by 2022-23.
However, the current situation throws India at an FD of 3.3%, RD at 2.3% and ERD at 1.3%. Primary Deficit of India is at 0.2%%. These figures do not seem to match the FRMB targets, but the results lie with the future.

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In these global times of unrest, one should not be looking at these figures, but atleast there should be a reminder that there are targets to be achieved. IMF reporting a lower GDP might become a headache for the Indian Government. Job creation is the along lost target, that government looked to tackle, but with lower GDP and less work in the territory, it might become a problem.
The government has put some restrictions on the FDI regulations, which some nations did not like and registered their dislike with the administration. But, the government seems to be looking at the future.

IMF has also said, that this impact of the pandemic might be a temporary one and India will recover from this by next year. IMF suggested of the V-shaped recovery for 2021-22.
Some of the economists suggested that the world economy will recover with a W-shaped recovery.
W-shaped recovery seems to be more logical and practical, looking at the aftershock in the economy, that will be unavoidable, looking at the wideness of the pandemic.
V-shaped or W-shaped, the economists of the world comes on the same page when they talk about the year 2020. A global slowdown.

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