Overall economic activity has continued to be resilient amid the third wave of COVID-19. This is reflected in the robust performance of several high-frequency indicators like power consumption, PMI manufacturing, exports, and e-way bill generation. Further, the Union Budget’s commitment towards public infrastructure development will encourage private investment, augmenting inclusive and sustainable growth. It is a testament to the farsightedness of policymaking that the Indian economy that contracted by (-) 6.6% in 2020-21, is now projected to grow the quickest among the group of large nations in 2022-23.
As India continues with the rapid vaccination program, it has not only caught up with its pre-pandemic Q2 output but is expected to surpass it over the next fiscal. India is poised to be among the few economies that will rebound strongly from the pandemic-induced economic contraction of 2020-21.
Infrastructure emerged as the topmost priority for the Narendra Modi government as the finance minister Smt. Nirmala Sitharaman said that the Budget 2022-2023 will lay the foundation for economic growth through public investment as Asia’s third-largest economy emerges from a pandemic-induced slump.
Although 2020-21 is being deemed as a “catch-up” year for global economies, the RBI has projected a 9.5% GDP growth for FY 2021-22, implying a full economic recovery, which can be attributed to India’s nuanced structural reforms. Leveraging on necessary macro and micro growth drivers, India is on course to be one of the few global economies to rebound strongly from pandemic-induced economic contraction.
Atmanirbhar Bharat Mission continues to play a critical role in shaping India’s economic recovery – both through the signaling of business opportunities and expansion of spending channels. It can be concluded that leveraging on necessary macro and micro growth drivers, India’s investment cycle is ready to catalyze its recovery towards becoming the fastest growing economy in the world.
The current pace of growth coupled with improvements across fiscal parameters attests to the resilience of the Indian economy. The strong performance of multiple sectors including manufacturing, agriculture, and industries as well as increased revenue collection and resumption of services are expected to sustain the nation’s overall growth trajectory.
India’s robust V-shaped recovery from the aftermath of the brutal second wave of the COVID-19 pandemic is reflected through the provisional GDP estimates for the April-June (Q1) quarter of FY 2021-22. This is also evidenced by the sharp growth in the agriculture, manufacturing & construction sectors, the gradual revival of the services sector after the relaxation of lockdown restrictions, and the sharp rise in the country’s
services PMI (Purchasing Managers Index) at an 18-month high of 56.7. Vaccination coverage is expanding at a rapid pace , with around 60 percent of India’s adult population being vaccinated with at least first dose, as on September 8, 2021. The current recovery of the economy is broad based and fast, in terms of both supply and demand, indicative of the country’s strong macroeconomic fundamentals.
In spite of the vaccination drive going on smoothly and rapidly, the global resurgence of the highly transmissible Delta variant of COVID-19 between May to July has raised major concerns and placed emphasis on the importance of following social distancing and COVID appropriate behavior, despite a decline in the number of cases. India’s cumulative vaccine doses administered so far amount to 515 million, with 49.8 percent of the population having received the first dose and 14.2 being fully vaccinated. Aided by the receding second wave, this has paved the way for India’s economic recovery.
The Indian economy is on the path of recovery from the impact of the second wave of Covid-19, with targeted fiscal relief, monetary policy measures and accelerated vaccinations across the country. A fall in the daily COVID cases has been observed since the latter half of May 2021, along with the doubling of the daily vaccination rate from 1.93 million to 4.13 million in June, at the end of which around 78 percent of districts reached a COVID positivity rate below 5 percent.
The effect of the second wave of Covid-19, has been so gargantuan, that the momentum of economic recovery in India has been moderated. the effect of the second wave has been asynchronous and wider in its spread across states and has also entered the rural hinterland. Vaccinating to achieve herd immunity (75-80 per cent of the population) is key to boosting
consumer and reinvigorate economic growth.
In the month of April, due to the second wave of the pandemic, there has been a moderation in the economic recovery witnessed since the first wave of the pandemic. The agriculture sector continued its growth trajectory with record food grain production and tractor sales exhibited an increase of 172 percent.
The resumption of economic activity has indeed ushered in an improvement in the nation’s fiscal standing and despite the emergence of the second wave of COVID-19 the economy stands resilient with multiple sectors exhibiting improved recovery.
The beginning of the new year has seen the emergence of a renewed COVID-19 wave with new variants. Despite the slow rise in the number of cases across the globe, economic activity in India has gathered pace, due to heightened consumer sentiment owing to the smooth vaccination drive in the country.
The economy has been on a V-shaped recovery since July 2020, buoyed by several high-frequency indicators including Agricultural growth, trade growth, power consumption, FDI and FPI inflows among others. The arrival of the COVID-19 vaccines has been balanced by the spread of a new mutation of the virus across the nation and the world at large.
The end of the year saw the arrival of the much-awaited COVID-19 vaccine, which may further help in curbing the pandemic. India has been successful in bending the COVID-curve till date, with reducing weekly/daily infections, rising recovery rate (now at around 95 per cent) and one of world’s lowest case fatality rates. The effective management of Covid-19 spread despite the festive season and onset of winter season, combined with sustained improvement in high frequency indicators and V-shaped recovery along with easing of lockdown restrictions distinguish Indian economy as one riding against the COVID-wave.