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India set to be among the world’s fastest growing economies in 2021

India set for a healthy economic recovery (IANS)

The Indian economy is poised for strong recovery in 2020-21 as it embarked on a massive COVID-19 19 vaccination drive aided by a simultaneous push to critical sectors such as agriculture, infrastructure and manufacturing.

The recently published report on world economy by United Nations Department of Economic and Social Affairs pegged India’s growth rate at 7.3 per cent in this calendar year, implying that the country could be among the fastest growing major economies. Last month, the Asian Development Bank (ADB) projected an 8 per cent growth rate for India in 2021.

“Things will be clearer once the Union Budget announcements are made. We are expecting a growth-oriented budget and some major announcements to come in. People are keenly waiting and depending on the announcements, many companies would firm up their investment decisions,” an analyst said.

Several economists added that India may even register a double-digit growth figure provided the coronavirus cases continue to slow down amid the vaccination drive.

A Deloitte report released last month, in fact, projected a 10 per cent growth rate for India in 2020-21.

“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 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 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

Several think tanks and ratings agencies had projected a double-digit contraction for India as it went into a stringent nationwide lockdown from end March but many of them have already made an upward revision in their forecasts. 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. 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.

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.

Global economy

According to the UN report, world gross product fell by an estimated 4.3 per cent in 2020—the sharpest contraction of global output since the Great Depression. However, it is expected to grow by 4.7 per cent this year and 5.9 per cent in the next.

“The depth and severity of the unprecedented crisis foreshadows a slow and painful recovery,” UN's Chief Economist Elliot Harris said.

The report underlined the rising importance of the services sector as an overall growth driver. India can already benefit from this. “The development of new growth sectors, aided by targeted fiscal stimulus and the disruptive effects of the crisis, could propel South Asia’s development trajectory and allow the region to make up lost ground much more quickly. A forceful global commitment to counter the negative consequences of the pandemic, particularly in developing countries, could also allow the region to build back better and stronger and regain its position as the global development champion,” the UN report said, adding that the developed countries have been the worst hit.