The Indian economy is now expected to experience a more rapid turnaround, given the imminent deployment of vaccine, increased mobility, and reduced disruptions to business operations as the economy opens up. India was slightly kicked off in 2019 because of its carnage that caused a pandemic and subsequent strict lockdown – businesses were shut down, consumer spending slumped, investments hit and jobs lost. Indeed it had overtaken the UK as the fifth-largest economy in the world in 2019.
The impact was coupled with a change from the economy to sixth place in 2020.
The pandemic acquired India with almost 1.5 lakh deaths, as a human and economic catastrophe. Even if deaths were slightly lower in the million than in Europe and the United States
A GDP fall of 7.5% forced Asia’s third-largest economy into an unparalleled recession. With constraints gradually removed, many parts of the economy could resume working.
A total of Rs29.87 lakh crore, or 15% GDP, was declared by Sitharaman. This refers to the overall expenditure expected for the year to March from the government budget. Yet the current financial cost has been measured at roughly 1.3% of GDP, including 0.7% for a five-year incentive program.
The government did not raise enough revenue to even pay countries for their GST share.
However, high-frequency indicators, including exports, car sales, energy use, and production performance, have shown an upswing that some saw as a sign of a ‘V’ shaped recuperation.
Rating agencies and analysts have increased their GDP growth forecasts by March 2021, with RBI forecasting a slight positive growth in the quarter from January- March.
According to Dun & Bradstreet, at the end of November 2020, 30% of successful companies in India still had disruptions, compared with 95% when the national lockdown was implemented in April 2020.
Arun Singh, Global Chief Economist, Dun & Bradstreet said “continued government support would be crucial for sustainability and drive growth – which has taken off. “Government spending was 48.6% of its forecast for the first six months of the fiscal year (April-October 2020). The balance of the budget will be spent on other non-budgetary expenses.”
This will promote growth in H2 FY21 along with the implementation of several policy initiatives.
The lending to the industry has, however, not yet recovered and this continues to cause concern.
“At a time when internal demand has not yet stabilized and export demand remains poor this does not bode well for the industry,” he said.
The India Ratings and Research (Ind-Ra) said that policymaking has twin challenges to collect and analyze accurate high-frequency data as an unparalleled catastrophe as a result of the COVID-19 pandemic.
“The GDP growth estimation shows that the worst has been achieved, but it does not yet show if the economy recovered or overtook the lost ground,” he says, adding that the economy in FY22 can only restore the lost ground and substantially outperform the FY20 GDP level in FY23.