The end of any quarter typically throws up a lot of economic analysis. Last week, the Reserve Bank of India released its June bulletin, which provided the RBI’s assessment of how the Indian economy is placed.
Even though hardly any entity knows as much about the Indian economy as the RBI, the more instructive analysis was carried out by the National Council of Applied Economic Research (or NCAER) as it released its Quarterly Economic Review.
The NCAER distinguished itself in finding innovative ways to map the state of the Indian economy during the pandemic. At a time when official sources of data suffered large gaps and inadequacies, researchers at NCAER found their own ways to assess the extent of economic disruption due to Covid.
India had produced goods and services worth Rs 146 trillion that year. Then, in the last financial year — that is, in 2020-21 — it fell to Rs 135 trillion. In the current financial year — that is, in 2021-22 — the GDP is expected to grow back to Rs 146 trillion after registering a growth of 8.3%. This would mean that, in terms of overall economic production, India would have lost two full years of growth.
There is a chance that India may grow by 10.1% this year, instead of 8.3%, and in that case, India’s GDP would go up to Rs 149 trillion but even so, India would be far off from where it could have been without Covid-19, wailing about the non-covid days is not what’s needed, but steps and methods are needed to procure what’s lost!
The NCAER review makes the following remark: “Unfortunately, an inexplicably contractionary fiscal policy in 2021–22, sharply reducing the deficit, will delay recovery.”
By all of this, one thing is very clear that India’s growth will see a slow pace with many upcoming future threats. With the rise in inflation rated, the god-father of our economy, i.e., the RBI, even it won’t be able to help in reviving, if the slow pace of vaccination, large gap between fiscal and monetary policy, the long and short term effects and the fear of third wave continue to strike the expectations down.