National Council of Applied Economic Research (NCAER) in a report has indicated that the Indian economy may grow 8.4 – 10.1 percent for the current financial year as against a contraction of 7.3 percent in the last fiscal. The report said the second COVID-19 wave, four times greater in ferocity as compared to the first wave in terms of a number of cases and deaths, has further disrupted the growth process, which had already been severely damaged by the first wave.
In its quarterly review of the economy, NCAER has pitched for strong fiscal support to push economic growth. It says that the gross domestic product (GDP) will grow 11.5 percent in Q1 (first quarter) and 8.4-10.1 percent for the whole year 2021-22. However, these high growth rates are also a reflection of the strong base effect since 2021-22:Q1 follows the very steep decline in 2020-21:Q1. At the end of 2021-22 GDP, on constant prices, would still be about the same as Rs 146 trillion (Rs 146 lakh crore) as in 2019-20. NCAER estimates the economic growth had contracted by 7.3 percent during 2020-21.
High-frequency indicators show a sharp decline in economic activity during April and May 2021, the peak of the second COVID-19 wave, though there are some indicators of recovery in June as unlocking proceeds and to restore the growth process after this situation for two consecutive years, the process now needs a strong positive push, it added.
NCAER said that strong expansionary macroeconomic policy thrust could help revive normal growth and fiscal deficit may remain high for a second consecutive year with revenues affected by the depressed level of economic activity.