After seeing setbacks in economic growth and losing many human lives, India is all set to re-bounce with its active vaccine program. Apart from saving human lives, the rollout of the vaccine will also ensure the economy is well controlled in the next fiscal year. After suffering a 9.4% fall in the GDP last year, it is expected to grow 11% in the next year.
FITCH suggests that after growth, the Indian economy will slow down again
Though it has been a tough year for people across the globe, with the vaccine being distributed now, it is expected that the world will become corona free soon. But the huge economic loss that the pandemic created globally will take time to recover again. As for the Indian economy rate, FITCH says, “We expect the gross domestic product (GDP) to expand by 11 per cent in FY22 (April 2021 to March 2022) after falling by 9.4 per cent in FY21 (April 2020 to March 2021)”. It further added, “A combination of supply-side scarring and demand-side constraints – such as the weak state of the financial sector – will keep the level of GDP well below its pre-pandemic path” which means after a peak, it will slow down again.
India suffered major economic losses even before the academic set in
It is not that only the pandemic has affected India’s economic growth, but it was already suffering before the pandemic set in. In 2019, the GDP fall was vigorous and it sank down to almost 4.2 per cent which is said to be a ten-year low rate. In the previous year, it was 6.1 per cent and thus, with the onset of the pandemic, the conditions became worse.
More from the FITCH survey
The FITCH ratings further stated that the banking sector and labour productivity are some of the key factors that need to be monitored to achieve exponential GDP growth. In the statement, it said, “Our historical analysis of India’s growth performance highlights the key role played by a high investment rate in driving growth in labour productivity and GDP per capita over the last 15 years. But investment has fallen sharply over the last year and the need to repair corporate balance sheets and firm closures will weigh on the pace of recovery”.
The PolicyTimes suggestion
- As the vaccine program starts rolling out from January 16, the Indian government must now look out for boosting the economy in most ways that it can. From restarting schools and colleges to undertaking unemployment aspects, it must look after the economic growth rate to sustain the setback that it suffered in the last year.
- Even if the target to massive GDP growth is not achieved with the next one or two fiscal years, the government must at least think of turning the fallout into positive growth by the end of the next fiscal year so that we don’t suffer major economic losses anymore.