India’s economy seems to start growing again: How?
India’s economic growth in the January-March quarter may have picked up from the previous three months.
India’s economy is expected to grow by 10% in the year starting on April 1.
Economists say that the relaxation of restrictions by states will determine the strength of the rebound. consumers’ willingness to spend will also be the key.
Still, after the second wave of severe COVID-19 hit the country, economists’ views on this quarter were even more pessimistic. The GDP of Asia’s third-largest economy increased by 1.0% year-on-year in the March quarter. It is much higher results than the previous quarter when India started to withdraw from the pandemic.
However, India’s second wave of infections and deaths caused forecasters to adjust their predictions for the coming months. The median forecast of economic growth from April to June is 21.6%, which is lower than the 23% a month ago. The economic recovery prompted most industrial states to implement lockdowns, resulting in millions of unemployed. For the fiscal year ending March 2022, economists lowered their median forecast from 10.4% to 9.8%.
COVID-19 infections begin to slow down in the country but still hits record numbers
As of Sunday, India has recorded 27.9 million cases of Covid-19 infection. India is only in second place after the United States, with 325,927 deaths. Though, the rate of increase has started to slow down.
The economic impact will not be a severe as last year as the lockdown is more relaxed. Besides, the growth of manufacturing and exports is also higher.
However, the second wave of pandemics still makes it difficult to return to the pre-pandemic growth rate. The downside risks of economic growth increase.
The central bank is increasing financial liquidity while keeping monetary policy accommodative
The central bank said on Thursday that growth prospects would depend on how quickly India can contain the infection. Modi has been criticized for the slow progress of his four-month vaccination campaign, which has vaccinated less than 4% of India’s 1.38 billion people. Analysts warn that a slow rollout may pose medium-term risks to growth, especially if the country is to experience the third wave of COVID-19.
What had the major impact on India’s economic growth and stability after the second wave of the pandemic?
Earlier this month, the reserve bank of India stated that the most significant blow to the second wave of infections was demand. Increased demand resulted in reduced liquidity, discretionary spending, and employment.
The central bank will also review interest rates later this week to keep monetary policy accommodative and inject liquidity into the system to support growth.
Consumer demand has plummeted due to declining household income and job opportunities, accounting for more than 55% of the economy. The Indian Economic Monitoring Center, a private think tank based in Mumbai, said that in the week ending May 23, the unemployment rate soared to a nearly one-year high of 14.73%.
