Indian economy expected to grow 10 per cent during FY2021-22: NCAER
India’s GDP for FY2021-22 is expected to grow approximately 10 per cent, said NCAER. Know the reasons for India’s economic growth and challenges ahead.
India’s GDP for FY2021-22 is expected to grow approximately 10 per cent on the likelihood of fewer COVID-19 linked supply disruptions and rise in the global economy, said Poonam Gupta, Director General of NCAER, an economic think-tank. However, sustaining a growth rate of 7 to 8 per cent in the years to come would be the real challenge, she added.
Even if two pandemic years are clubbed together, the net growth would be very small. The Indian economy at the end of 2021-22 would be only slightly larger than at the end of 2019-20, Gupta added.
Poonam Gupta, Director General of the National Council of Applied Economic Research (NCAER) is the first woman director of NCAER. She was the lead economist at the World Bank. She has also been the Reserve Bank of India Chair Professor at NIPFP, and a Professor of Microeconomics at ICRIER. She has taught at the Delhi School of Economics, and the University of Maryland. She holds a Masters in Economics from the Delhi School of Economics and a Ph.D. in Applied Macroeconomics and International Economics.
India to grow by 10 per cent during FY2021-22: Key points
India has fared well during the COVID-19 pandemic because of the fast pace of vaccination. Ensuring rapid and widespread vaccination is the best pro-growth policy as of now that any country can implement to recover their economy.
Reasons for economic growth in India in FY2021-22
(i) Fewer supply disruptions
(ii) Increased pent-up demand in the traditional and contact-intensive services
(iii) Rising global economy
Economic challenges for India
Recovering from the impact of COVID-19 and sustaining post-COVID-19 growth rates of at least 7 to 8 per cent are among the key economic challenges for India.
In the past decade, India faced one of the biggest economic challenges on the account of a slowdown in private investment. The rate of private investment declined from a peak of 36 per cent of GDP in 2007 to 27 per cent in 2020.
Economic growth of India – Background
The economic growth of India surged to 20.1 per cent in the April-June quarter of this fiscal. The Gross Domestic Product (GDP) contracted by 24.4 per cent in the April-June quarter of FY 2020-21.
Further research into India’s experience with inflation targeting has shown that the monetary policy of the country catered to growth concerns as much if not more than to the inflation concerns. The pro-growth policy has continued even during the pandemic, Gupta said.
The RBI has been quite supportive of growth in India through its key policy rate as well as the implementation of liquidity measures and regulatory forbearance, she added.
The Reserve Bank of India (RBI) expects the GDP growth of India at 9.5 per cent in 2021-22 with a 21.4 per cent in Q1, 7.3 per cent in Q2, 6.3 per cent Q3, and 6.1 per cent in Q4 in 2021-22.
Overall, the growth policy of the Indian economy has yielded positive results in the country that ensured macroeconomic stability while handling the pandemic. This is a very complex yet delicate balance to attain for any emerging market, Gupta noted.
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