In a recent approach, the Indian Rating and Research revised India’s FY22 real GDP growth forecast. A decline was noticed in the earlier projection of 10.4 percent, citing the second wave of COVID-19 infections and the slower pace of vaccination. Earlier this month, the Reserve Bank maintained its 10.5 percent GDP growth estimate, but Governor Shaktikanta Das has flagged the rising cases as the biggest impediment to recovery announcing 10.1% as the new GDP.
Since the first wave, the nation is battling against itself to reach its fiscal demands to stabilize the economy. A contraction by around 7.6% in the FY21 was estimated. India Ratings said the impact of the second wave will not be as disruptive as the first one, despite the daily caseload touching three times of the first wave’s peak, as lockdowns are set to be localized ones.
The GDP sustenance
With the vaccination drive extended to adults beyond 18 years, an increase in its production will be witnessed. Moreover, the vaccination would cost 0.12 percent of the GDP to the union government and 0.24 percent to the state administrations. The demand-side component of GDP namely private final consumption expenditure, government final consumption expenditure, and gross fixed capital formation are now expected to grow at 11.8 percent, 11.0 percent, and 9.2 percent, respectively, in FY22, as against the earlier forecast of 11.2 percent, 11.3 percent, and 9.4 percent, respectively
TPT Policy Advocacy and Recommendations
- Taking learning from the first wave the government should invest in developing economic inequality for rescuing the nation from the minacious second wave. Economists, through simulation models, have predicted various scenarios of the socio-economic impact of virus outbreaks and efforts towards betterment. The administration should collaborate with conglomerates, corporations, and multinationals to postulate strategies that could help grow the GDP.
- Equal access to Health and Essential services is an important condition for equitable development. An important lesson the Indian administrations should implement while curating policies is to provide greater impetus to sectors that make allocation of resources that will shield the GDP. Greater support to MSMEs, higher public expenditure on health and education, and making the labor force a formal employee in the economy are some of the milestones that the nation has to achieve. It is undoubtedly the need of the hour to prepare for a future that is sustainable, structurally more viable for living and working.