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New Delhi: The Indian economy is likely to contract in the range of 5-7.5% this fiscal but will see a growth of 9 to 11% in FY 2021-22, former chief economic adviser Arvind Virmani said.

Addressing a virtual event organised by industry body PHDCCI, Virmani said in the upcoming Budget, the government should come up with policies to accelerate India’s economic growth.

“In the post pandemic Budget, policy reforms (are) needed for accelerating India’s economic growth…,” he said adding that the economy is likely to contract to 5 per cent to 7.5% in FY2020-21 and grow 9-11% in the next fiscal,” he said.

The Union Budget for FY2021-22, the eighth of the Narendra Modi-led government, is scheduled to be presented in Parliament on February 1, 2021.
Finance Minister Nirmala Sitharaman will be presenting her third Budget.

The Reserve Bank of India (RBI) has projected the Indian economy to contract 7.5% in the current fiscal while the National Statistical Office (NSO) estimates the contraction at 7.7%.

Virmani further said that India can’t become ‘Aatmanirbhar’ with the 20th century Direct Tax Code (DTC).

“There is a need to simplify direct taxes and indirect taxes for MSMEs. We can’t have 21st century Aatmanirbhar with 20th century DTC… We need 21st century Direct Tax Code,” he said.

The eminent economist also emphasised that there is a need of 15% uniform GST rate  for 75% of goods and services.

Noting that production-linked incentive (PLI) was actually a very good scheme, Virmani said the government should promote employment generating exports.

Virmani also pointed out that free trade agreements (FTAs) with the US, European Union (EU) and the UK are much important than with the Regional Comprehensive Economic Partnership (RCEP) because most MNCs are located in the US, EU and the UK.

He also suggested that the government should spend more on infrastructure projects, modernise sewage system to deal with the future pandemic and invest on R&D on contagious diseases.