Growth constraints

State govt finances would remain under pressure for years

Union Finance Minister Nirmala Sitharaman noted on Tuesday that the growth rate in the current fiscal year might be near zero. This is an overly optimistic estimate because most forecasters, including the Reserve Bank of India (RBI), expect a near double-digit decline in real output this year. The level of contraction might optically make the recovery look strong in the next fiscal year and position India as one of the fastest-growing large economies in the world. However, policymakers can’t afford to get carried away by such numbers. The pandemic pain is likely to be more enduring for the Indian economy,