In an interview with , Sen further said that due to the ongoing 21-day shutdown, there may be a reduction of about Rs 5 lakh crore in gross domestic product (GDP).
"Due to the complete lockdown across the country for 21 days, the economic growth in the first quarter of the next financial year will be very low.
"I don't expect economic growth in next two quarter (of 2020-21) to be more than 3 per cent which makes achieving the USD 5-trillion target by 2024-25 very very difficult," Sen said.
Prime Minister Narendra Modi announced a complete lockdown across the country for 21 days from Tuesday midnight, asserting that social distancing is the only way out for the country in its decisive battle against the coronavirus.
"Now, my estimate is that the loss depends largely upon the extent to which the shutdown will continue. At the moment, it is for a three-week period and over those three weeks, the economy will probably be taking a reduction of GDP of around Rs 5 lakh crore," he pointed out.
India's GDP growth had slipped to a nearly seven-year low of 4.7 per cent in the October-December quarter of 2019-20, weighed by a contraction in manufacturing sector output. In the July-September quarter of the ongoing financial year, the economic growth was revised to 5.1 per cent from the 4.5 per cent estimated earlier. The Modi government aims to make India a USD 5-trillion economy by 2024-25.
Asked whether there is a case for a fiscal stimulus, he said that at the moment, fiscal stimulus is not going to help growth because problem is now a supply-side problem.
"Production is not taking place. Fiscal stimulus works when problem is on the demand side.
"At the moment, fiscal intervention should be to make sure that the poor and vulnerable who don't have money to tide over this period don't get to pushed into hunger," Sen, who chairs the Standing Committee on Economic Statistics, said.
Stating that the finance ministry unfortunately cannot do much to boost growth as the country is in a lockdown situation and production is not happening, he said, "At the moment, I think focus should not be growth at all. The finance ministry's focus should be to make sure that effects of lockdown do not lead to poverty among the working class."
On whether the RBI should cut policy rates, Sen said it is not strictly necessary at the moment.
"Repo rate cut becomes important when you have investment activities going on. But at the moment, that is not the issue. I think repo rate cut can wait," he said. BKS HRS