“The Indian economy's resilience will be tested by its ability to overcome a devastating outbreak of Covid-19, although no one's yet doubting its potential to pull off the world's fastest pace of growth among major economies this year,” Bloomberg economists said in their assessment.
The same sentiments were expressed by India’s Chief Economic Adviser (CEA) K.V. Subramanian – who said that the overall impact of the second wave of Covid-19 is unlikely to be significant, although there is uncertainty over possible double-digit growth in the current financial year. His comments came at the release of the latest growth figures, where India reported a 7.3 per cent contraction in its GDP for FY21.
Subramanian said providing any actual numbers for economic forecasts would not be prudent as the pandemic is evolving and the economic trajectory of the country totally depends on the severity of the pandemic. "Whether or not that will be double digit or single digit there is uncertainty because scientists are also talking of a possibility of a third wave. Economic activity is inexplicably linked to the path of the pandemic," Subramanian said.
He noted that "the speed and the scale of the second wave does lend caution" towards the economic recovery.
The CEA was of the view that with the country still battling with the pandemic, continued monetary and fiscal policy support will be crucial going ahead. India's GDP growth rate plunged 7.3 per cent in 2020-21. Though not comparable, the GDP had grown by 4 per cent in 2019-20.