India is set to register a double-digit growth rate at 11.5 per cent in 2021, followed by China by at 8.1 per cent, the International Monetary Fund in its World Economic Outlook report said on Tuesday. This would mean that India with its robust growth rate will be the fastest growing economy in the world.
In 2022, India is projected to clock a growth rate of 6.8 per cent while China’s economy is set to grow at 5.6 per cent.
The IMF said that policy actions should ensure effective support until the recovery is firmly underway while underlining the need for strong multilateral cooperation to handle the pandemic.
Earlier, IMF Managing Director Kristalina Georgieva praised India for taking decisive steps to deal with the pandemic and its economic consequences.
While the recently published report on world economy by United Nations Department of Economic and Social Affairs pegged India’s growth rate for 2021 at 7.3 per cent, the Asian Development Bank last month said that India’s economy would expand 8 per cent. A Deloitte report released last month, in fact, projected a 10 per cent growth rate for India in 2020-21.
Analysts said that the Indian economy is poised for strong recovery in 2020-21 as it has already embarked on a massive Covid 19 vaccination drive aided by a simultaneous push to critical sectors such as agriculture, infrastructure and manufacturing.
However, the growth roadmap would be clearer after the Union Budget announcements on February 1. Insiders said that the budget will be growth-oriented giving a fillip to consumption.
“There will be strong economic growth in 2021-22, things have fortunately started moving and businesses are showing signs of bouncing back. Though we are yet to touch pre-Covid levels, things are moving fast with the current reform measures,” Deepak Sood, Assocham secretary general Deepak Sood told IndiaNarrative.com.
BJP’s national spokesperson Gopal Krishna Agarwal said that India was poised to register a V-shaped recovery. “All economic indicators suggest that India is set for a V-shaped recovery. Business sentiments have significantly improved with the launch of the Covid 19 vaccine..the focus will be on key sectors which include rural, agriculture, infrastructure and manufacturing to ensure that India is back on the growth path,” Agarwal said.
A V-shaped recovery is typically marked by a sharp and sustained economic bounce back after a big fall to the previous levels.
Sources said that the Production-Linked Incentive (PLI) scheme to boost manufacturing will get a further push to attract investments, both foreign and domestic.
India’s economic recovery better than expected
A timely stimulus package coupled with a good monsoon and the roll out of several reform measures helped India to recover from the 23.9 per cent drop in GDP growth in the first quarter of the financial year 2020-21. India’s second quarter GDP growth contracted by 7.5 per cent. The ADB, for instance earlier projected a 9 per cent contraction for India for the full year but revised it later to 8 per cent. The IMF too has pegged India’s economy to contract by 8 per cent in 2020.
According to government’s own estimate released by the Ministry of Statistics & Programme Implementation (MoSPI), India’s real GDP is set to contract by 7.7 per cent in this financial year owing to the Covid19 induced lockdown for over two months.
The Confederation of Indian Industry noted that the advance estimate for the full year pegging the contraction in GDP at 7.7 per cent indicates a “shallower decline than earlier expected.” “Government spending did much of the heavy lifting in supporting growth along with a healthy agriculture performance which was aided by a good monsoon. In the last few months, there has been a strong economic recovery which will require to be nurtured especially in supporting the critical pillars of consumption to sustain the recovery momentum,” Chandrajit Banerjee, Director General, CII said.
