India's current macroeconomic situation is "very uncertain" and the country's GDP could contract closer to 10 per cent in the current fiscal, former chief statistician Pronab Sen said on Sunday.
In an interview with PTI, Sen said that although the overall macro-management of the economy by the Modi government has not been very good but this particular slowdown is really beyond its control.
"At the moment India's current macroeconomic situation is very uncertain. I would say we should be very very cautious. I think there is too much optimism going around.
"... the actual economic growth of India could be closer to -10 per cent in 2020-21," he said.
Sen said quarterly GDP numbers are still derived from some corporate accounts and corporates have not fared as badly as the non-corporate sector.
"We know that MSMEs have been hit much harder than the corporations. So, the headline number coming out in the national accounts is an overly optimistic picture of the economy," the eminent economist said.
Sen also stressed on bringing back confidence of the investors.
Investors are new people who put their money into creating new production capacity, that is completely missing, he said, adding that until that comes back, the economy cannot grow.
"Because at the moment, as things stand our production capacity will not be very higher than what it was in 2019-20. And in fact, it will be less than that because some of the capacity may have closed down," the former chief statistician noted.
Sen, who is also heading the Standing Committee on Statistics (SCES) said the committee could not finalise its report.
India's economy recovered faster than expected in the September quarter as a pick-up in manufacturing helped the GDP clock a lower contraction of 7.5 per cent and held out hopes for further improvement on better consumer demand.
The Gross Domestic Product (GDP) had shrunk by a massive 23.9 per cent in the first quarter of the current fiscal as the Covid-19 lockdown pummelled economic activity.
The second straight quarter of contraction pushed India into a technical recession for the first time.
According to the RBI, the Indian economy is likely to contract by 7.5 per cent in 2020-21.