Rebounded after 3 waves... US pat for India, its economy

The Indian economy has rebounded strongly despite three significant COVID-19 waves, the US Treasury has said in a report to Congress.

India’s acute second wave weighed heavily on growth through the middle of 2021, delaying its economic recovery, the Treasury said in a semi-annual report.

“However, economic activity rebounded strongly in the second half of the year as India’s vaccination rollout accelerated,” the Treasury said, as it praised India’s vaccination efforts.

As of the end of 2021, about 44 per cent of India’s population was fully vaccinated, it said. After contracting seven per cent in 2020, the output returned to pre-pandemic levels by the second quarter of 2021, with full-year 2021 growth of eight per cent, it added.

Since the beginning of 2022, India faced a third major outbreak driven by the Omicron variant, but the number of deaths and broader economic fallout has been limited, it said.

The Indian government continued to provide fiscal support to the economy

India’s acute 2nd wave weighed heavily on growth through middle of 2021. However, economic activity rebounded strongly in the second half of the year as its vax rollout accelerated US Treasury, in its report to Congress

against the backdrop of the pandemic in 2021, it said. The authorities estimate that the overall fiscal deficit will reach 6.9% of GDP for 2022 fiscal, which is higher than deficits prior to the pandemic, it said.

After recording a current account surplus of 1.3 per cent of GDP in 2020, its first surplus since 2004, India returned to a current account deficit of 1.1% of GDP in 2021.