Reserve Bank of India’s January Bulletin has some good news in it. According to this GDP is within the striking distance of attaining positive growth. Finance Minister Nirmala Sitharaman is scheduled to present the Union Budget in Lok Sabha on February 1.
As the COVID-19 pandemic severely hit the key manufacturing and services segments India’s GDP is estimated to contract by a record 7.7 percent during 2020-21, as per government projections released earlier this month. The economy contracted by a massive 23.9 percent in the first quarter and 7.5 percent in the second quarter on the account. However, an article ‘State of Economy’ indicates that in the first half of 2021-22, GDP growth will benefit from statistical support and is likely to be mostly consumption-driven.
The article further said: “Recent shifts in the macroeconomic landscape have brightened the outlook, with GDP in striking distance of attaining positive territory and inflation easing closer to the target. E-commerce and digital technologies will likely be the bright spots in India’s recovery in a world in which there will be rebounds for sure, but pre-pandemic levels of output and employment are a long way off.”
“What will 2021 look like? The shape of the recovery will be V-shaped after all and the ‘V’ stands for a vaccine. India has launched the biggest vaccination drive in the world, backed by its comparative advantage of having the largest vaccine manufacturing capacity in the world and a rich experience of mass inoculation drives against polio and measles. If successful, it will tilt the balance of risks upwards,” said the article.
“India being the global capital for vaccine manufacturing, pharmaceuticals exports are expected to receive a big impetus with the start of vaccination drives globally. Agricultural exports remain resilient and under the recent production linked (PLI) scheme, the food processing industry has been accorded priority,” it said.