Reliance Group reverses earlier pay cuts, with retrospective effect - spelling a bonanza for employees ahead of the festival season. With IT companies and banks announcing pay hikes and government employees getting leave travel allowance (LTA) advances, economists say, consumption could get a boost. Will this mean that we could see a faster than expected recovery, is anyone already trimming the fairly dire GDP forecast that we got at the end of August? Indranil Pan of IDFC First Bank, DK Joshi of CRISIL and Anandorup Ghose, Partner at Deloitte India took this discussion forward.

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Most companies which had delayed increments are now taking them up, said Ghose. “All the companies that had not taken a decision or had pushed the decision back by a couple of quarters are now taking that call,” he said.

“There is no doubt that the economy is seeing a rebound right now which was faster than we expected. It is a result of opening up of the economy, there was a pent-up demand which is getting met right now and the rural economy doing somewhat better than the urban. This kind of a pick-up has been seen in other economies as well,” said Joshi.

Joshi believes the second quarter is looking somewhat better than what was expected. “We expected -12 percent and as of now it looks much more than that,” he stated.

“We have just ended the first phase, feeling very positive about it. We would want to see whether we are hit by the second wave which most of the European countries have been hit by. Spain went into another round of lockdown. US is being hit by the third phase. Any further spread of this virus and any further quasi lockdown even for the Indian economy can turn out to be disastrous simply because we don’t have adequate room in terms of either the monetary policy or the fiscal policy,” Pan mentioned.

Disclosures: Network18, the parent company of CNBCTV18.com, is controlled by Independent Media Trust, of which Reliance Industries is the sole beneficiary.

First Published:Oct 26, 2020 5:06 PM IST