India’s rebound faster than damage wreaked by Covid: PM Modi

India’s fast economic recovery, estimated at a growth rate of around 10 per cent during the current financial year, is stronger than expected given the enormity of the impact it suffered due to the Covid-19 outbreak.

“Covid-19 affected the economies of the entire world, including that of India. But our economy has recovered more strongly than it was halted by the pandemic,” Indian Prime Minister Narendra Modi said in a virtual address to a gathering after inaugurating a complex for providing training to job aspirants in Ahmedabad.

He said India was in reform mode when big economies were in a defensive mode. “When global supply chains were being disrupted, we were launching production linked incentive (PLI) schemes to turn the tide in India’s favour.”

“We should look upon ourselves as global economic leader as in the 21st century, India does not have a scarcity of opportunities to make it big,” Modi said.

The PLI scheme, rolled out for 10 key sectors, including textile and automobiles, is aimed at helping the country’s economy recover faster after the pandemic.

As per the latest data released by the National Statistical Office (NSO), India’s economic growth surged to 20.1 per cent in the April-June quarter of this fiscal, helped by a low base of the year-ago period, despite a devastating second wave of Covid-19. The gross domestic product (GDP) had contracted by 24.4 per cent in the corresponding April-June quarter of 2020-21.

In the current fiscal (2021-22), the Indian economy is expected to grow around 10 per cent on the likelihood of fewer Covid-19-linked supply disruptions and buoyancy in the global economy, said Poonam Gupta, director general of economic think-tank NCAER. The real challenge, however, would be to sustain a growth rate of 7-8 per cent in years to come, she said.

“We could see annual growth in the ballpark range of about 10 per cent. The reasons for this perceived optimism are: fewer supply disruptions; increased pent-up demand in the traditional and contact-intensive services; and a buoyant global economy.

“Even so, if two pandemic years are taken together, there would be a very small net growth. In other words, the economy at the end of 2021-22 would be only slightly larger than at the end of 2019-20,” Gupta said.

On the challenges being faced by the Indian economy, she said the first one is to recover from the impact of Covid-19 and the second is to sustain post-Covid-19 growth rates of at least 7-8 per cent.

India has done rather well during the Covid-19 pandemic, primarily because of the rapid pace of vaccination, Gupta said, adding, “Currently, ensuring rapid and widespread vaccination is the best pro-growth policy that any country can implement.”

India’s central bank, the RBI, expects the GDP growth at 9.5 per cent in 2021-22 consisting of 21.4 per cent in the first quarter; 7.3 per cent in Q2; 6.3 per cent in Q3; and 6.1 per cent in Q4 of 2021-22.

— issacjohn@khaleejtimes.com