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India must ride with 5.6% world growth to achieve $5 trillion economy goal

World economy on a recovery path

As the world economic growth is likely to expand by 5.6 per cent, several countries have started looking at an alternative supply chain network in the post Covid phase.

A World Bank blog noted that growth in advanced economies is expected to reach 5.4 per cent—the highest rate in nearly 50 years—driven by rapid vaccination and unprecedented fiscal and monetary policy support since the beginning of the pandemic.

Policymakers and economists said that India is set to benefit from this but it needs to avert a third Covid wave. The number of Covid cases has shown an increase in the last few days as Kerala registered 13,773 cases on Thursday.

Also read: India's exports touch $95 billion in April-June quarter–the highest ever: Goyal

“The global economic recovery will have a positive impact for India but it needs to stay focused on the vaccination drive,” DK Srivastava, chief policy adviser of EY India told India Narrative.

“This year is likely to mark the strongest post-recession rebound in 80 years,” the World Bank blog said.

India’s export sector   touched $95 billion—the highest quarterly figure ever, beating the earlier record of $90 in the fourth quarter of 2020-21.

India has started to witness a windfall. “Export orders have increased from Europe and the US. The increase in demand has also led to a shortage of containers,” Ajay Sahai, director general, Federation of Indian Export Organisation told India Narrative. “We are expecting this trend to continue as many countries have increased their orders from India,” Sahai added.

Finance Minister Nirmala Sitharaman has also announced a massive Rs 6.29 lakh crore stimulus package with the aim to revive the economy and help the country fight against the deadly pandemic.

Also read: India Inc expects faster economic recovery after second wave but vaccinations would be key

Policy watchers added that India must act fast if it has to attract foreign direct investments and position itself as a credible alternative to China.

“Ease of doing business needs to be further improved and there is no time to waste as we will very soon see a different world and India needs to make its place in the new structure,” an insider said.

The World Bank however added that almost all advanced economies will go back to their pre-pandemic per-capita income levels in 2022 but the poorest countries will continue to suffer.