Prospects of 11.5 per cent Growth Rate for India – All India Radio (AIR) IAS UPSC

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Search 27th January, 2021 Spotlight News Analysis here: http://www.newsonair.com/Main_Audio_Bulletins_Search.aspx

TOPIC: General Studies 3

• Indian Economy

In news: The International Monetary Fund (IMF) projected an impressive 11.5 per cent growth rate for India in 2021, making the country the only major economy of the world to register a double-digit growth this year amidst the coronavirus pandemic.

• The International Monetary Fund’s growth projections for India in its latest World Economic Outlook Update reflected a strong rebound in the economy, which is estimated to have contracted by eight per cent in 2020 due to the pandemic.
• In its latest update, the IMF projected a 11.5 per cent growth rate for India in 2021.
• China is next with 8.1 per cent growth in 2021 followed by Spain (5.9 per cent) and France (5.5 per cent).
• Revising its figures, the IMF said that in 2020, the Indian economy is estimated to have contracted by eight per cent. China is the only major country which registered a positive growth rate of 2.3 per cent in 2020.

Image source: https://indianexpress.com/article/world/imf-projects-impressive-11-5-per-cent-growth-rate-for-india-in-2021-7162652/ 

India in 2021

India’s economy, the IMF said, is projected to grow by 6.8 per cent in 2022 and that of China by 5.6 per cent. With the latest projections, India regains the tag of the fastest developing economies of the world.

India actually has taken very decisive action, very decisive steps to deal with the pandemic and to deal with the economic consequences of it. India went for a very dramatic lockdown for a country of this size of population with people clustered so closely together. And then India moved to more targeted restrictions and lockdowns.

What worked well: Transition, combined with policy support, seems to have worked well. Why? Because if one looks at mobility indicators, we are almost where we were before COVID in India, meaning that economic activities have been revitalized quite significantly,

Commending the steps being taken by the Indian government on the monetary policy and the fiscal policy side, IMF Managing Director Kristalina Georgieva said it is actually slightly above the average for emerging markets. Emerging markets on average have provided six per cent of GDP. In India this is slightly above that. Good for India is that there is still space to do more, adding that she is impressed by the appetite for structural reforms that India is retaining.

The Finance Ministry had also exuded confidence that India would recover at a fast pace and reach pre-Covid levels by the end of this fiscal unless a second wave of cases was triggered by a fatigue with social distancing.

Global Economy

The IMF said the global economy is projected to grow 5.5% in 2021 and 4.2% in 2022. “The 2021 forecast is revised up 0.3 percentage point relative to the previous forecast, reflecting expectations of a vaccine-powered strengthening of activity later in the year and additional policy support in a few large economies,” it added.

The IMF, however, warned that delays in vaccine rollout, widespread hesitancy in inoculation, shorter-than anticipated immunity from the vaccines could be a downside risk to recovery. It adds that winding down of policy support before economic recovery could further hurt global growth.