The budget should double down on incentives for clean energy
The long shadow cast by the covid pandemic over most of 2020 is likely to remain the overarching theme for many of the important economic decisions that will be made in 2021, too. With at least two vaccines now officially approved by the government, it is just a matter of months before things start to return to normal in India. While it would be futile to expect too quick a recovery, we can definitely hope for 2021 to be better than 2020.
The first advance estimates released by the National Statistical Office (NSO) in the second week of the new year have projected India’s gross domestic product (GDP) to contract 7.7% this fiscal. There is little or no surprise here.
But, the forecast has also said that of the eight sectors included in the final tally, electricity generation will be one of the two sectors that will end the year on a positive note, the other being agriculture. This also underlines the fundamental value of electricity in our lives and why continuous efforts to strengthen the sector are vital for the future of India’s economy.
The finance minister has indicated that spending would not be curtailed to narrow the deficit. But markets have their comfort levels, and the government may need to manage not just its own purse but also market expectations.
Markets await macro signals
