How Hard Has Covid-19 Pandemic Hit The Indian Economy?

The second wave of Covid-19 has led to a reassessment of the economic growth rate of India and it has ensured that the prospect of the economy in the long-term is still robust due to its current fiscal. The silver lining for the same has been possible due to low disruption in the production and supply chains during the second wave of Covid-19. The vaccination drive of the country normalized mobility to a huge extent. Even though the government has predicted a GDP growth of 11%, this estimate has been pulled down by rating agencies like Asian Development Bank. It is expected that the accommodative monetary policy from RBI and an increase in Capex from the government will help the economy to get back on track with economic growth. 

Another additional driver of growth includes the diverse opportunity for exports. The factors contributing to the growth of the Indian economy include initiatives like privatization of public sector enterprises, implementation of National Infrastructure Pipeline, monetization of assets, targeted investment incentives and labour codes. It is noted that India was on the right path of recovery in the latter half of FY21, however, the progress was slowed down due to the hit of the second wave of COVID-19. 

A reassessment of FY 22 is required as the second wave of COVID-19 has hit hard the health care facilities which resulted in localized lockdown. The impact of which was low mobility as it was a year ago. According to reports, SBI which is the largest public lender has also decided to slash its FYY to growth prediction. 

It was visible through data that jobs were impacted which in turn affected the household economy and many poor people and small businesses are suffering the wrath of it. In the first wave, the rural economy was saved. However, the second COVID-19 had a toll in the rural areas too. Not only SBI, but many other banks and rating agencies have lowered the GDP forecast of FY22. Previously, SBI predicted the FY22 growth to be around 10.4% but after slashing it, the new forecast is only 7.9%. Further, in the history of the country, the economy contracted by 7.3% in FY21. 

The World Might See 6% Grown in GDP in 2021

According to the IMF's forecast, a 6% growth in global GDP can be seen in 2021. However, reports of both second and third waves of COVID-19 hitting the world at a different time and virus mutation has increased the risk of a strong growth rebound. This, in turn, makes the recovery both uncertain and uneven. However, it should be noted that the impact of the second wave of the COVID-19 wave on the economy. Many small businesses have been impacted as the exports were hampered. A report also stated that even though the economic recovery process of the world is running at a solid pace, the same will not be reflected in many parts of Asia due to more social distancing restrictions which have limited mobility options. 

The rebound capacity is seen to be faster in developed countries while developing countries like India also expected a faster rebound is facing disappointment. Countries like the US and China, however, are rebounding in a better manner. Even Bangladesh has surpassed the per capita income of its citizens in comparison to India. The low per capita income of India further indicates that poverty is rising in the country and the inequality between the rich and the poor is increasing. 

Economic Recovery To Be Resumed By Year-End

Recently, Moody’s Analytics released a report named “APAC Economic Outlook: The Delta Roadblock” according to which the economic recovery will start working again by the end of 2021. It was duly noted that even though the Delta variant of the virus is having a negative impact on the economy, the economy will not be as badly affected as it was in the second quarter of the last year. However, the economy has affected common people and to earn some money for their livelihood, people are participating in government-organized lotteries like Lottery Sambad and Dhankesari. Further, people are trying to learn more about online skills to start earning money by working digitally. The importance of digital India was realized more than ever after the country was hit by COVID-19.