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India’s economy surges by 20.1% aided by low base

Indian economy on its way to recovery

India’s economy grew by 20.1 per cent during the April-June quarter of the current financial year despite Covid induced lockdowns imposed in several states. However, the “huge” growth is also aided by a sharp contraction of 24.4 per cent in the corresponding quarter of the previous financial year.

With this growth rate, India has become the fastest growing economy among the G-20 nations.

The Covid induced restrictions during the second Covid wave was not as stringent as the previous one. Besides, most companies had adjusted to the new working rules by the time India faced the second wave. 

However, India’s GDP at constant prices (2011-12) during the April-June quarter stood at Rs 32.38 lakh crore — lower than the Rs 35.66 lakh crore in the first quarter of 2019-20.

Also read: ADB lowers India's growth projection to 10% this year from earlier 11%

“This is not unexpected as many states in India imposed another round of strict lockdown, naturally we cannot these figures with normal times,” an analyst told India Narrative.

After the country’s economy contracted for two consecutive quarters in 2020-21, India returned to the growth path from the third quarter. In the October-December quarter of 2020-21, India registered a growth of 0.5 per cent and subsequently in the fourth quarter the economy grew by 1.6 per cent.

D K Srivastava, chief policy adviser of EY India noted that the output of the April-June quarter of 2021-22 and GDP growth data reflect the differential impact of Covid 19 first and second waves. “Both affected the 1Q performance respectively in 2020-21 and 2021-22. The adverse impact of Covid’s second wave has largely dragged the performance of the key service sector namely trade, transport, storage et. al. which grew by 34.3% in 1Q of 2021-22 as compared to a contraction of (-)48.1% in 1Q of 2020-21,” he said in a statement.

The key challenge for India now is to prevent a third wave. The only way to ensure that is to keep the aggressive vaccination drive on. While India has so far administered 63.9 crore vaccines, it has a long way to go. Only 14.6 crore are fully vaccinated, which is just 10.7 per cent of the total population.

India would also have to start vaccinating the younger citizens, who are below the age of 18.

The pace of vaccination, thus, is directly linked to sustained economic revival.