Central bank paper bullish on revival path
MUMBAI: India’s GDP is within the striking distance of attaining positive growth, the Reserve Bank said observing that the letter “V” in the V-shaped recovery stands for vaccine.
The government launched the world’s biggest vaccination drive on January 16 to protect people from Covid-19. “What will 2021 look like? The shape of the recovery will be V-shaped after all and the ‘V’ stands for vaccine,” said an article on the ‘state of economy’ in the RBI’s January Bulletin.
India has launched the biggest vaccination drive in the world, backed by its comparative advantage of having the largest vaccine manufacturing capacity in the world and a rich experience of mass inoculation drives against polio and measles. “If successful, it will tilt the balance of risks upwards,” said the authors who among others include RBI deputy governor Michael Debabrata Patra.
E-commerce and digital technologies will likely be the bright spots in India’s recovery in a world in which there will be rebounds for sure, but pre-pandemic levels of output and employment are a long way off, they said. The article further said: “Recent shifts in the macroeconomic landscape have brightened the outlook, with GDP in striking distance of attaining positive territory and inflation easing closer to target.”
India’s GDP is estimated to contract by a record 7.7% during as the pandemic hit key manufacturing and services segments, as per government projections released this month.
The economy contracted by a massive 23.9% in Q1 and 7.5% in Q2 on account of Covid.
The article further said that in the first half of 2021-22, GDP growth will benefit from statistical support and is likely to be mostly consumption-driven. With rabi sowing surpassing the normal acreage way before the end of the season, bumper agriculture production is expected in 2021. “India being the global capital for vaccine manufacturing, pharmaceuticals exports are expected to receive a big impetus with the start of vaccination drives globally. Agricultural exports remain resilient and under the recent productionlinked incentive scheme, food processing industry has been accorded priority,” it said.
Finance minister Nirmala Sitharaman is scheduled to present the Union Budget in Lok Sabha on February 1.