Economic Survey 2021: India’s V-shape recovery supported by vaccine drive

Economic Survey 2021: India’s V-shape recovery supported by vaccine drive

MUMBAI: The Economic Survey for 2020-21, released on Friday, said the ‘V-shaped’ recovery being seen in the domestic economy is being supported by the ‘mega’ Covid-19 vaccination drive in the country.

“Together, prospects for robust growth in consumption and investment have been rekindled, with estimated real GDP growth for FY2021-22 pegged at 11 per cent,” the survey noted.

India’s economy is slated to witness a sharp contraction of 7.7 per cent this financial year. However, the rebound after the national lockdown was lifted in June has helped the economy narrow the contraction in the past few quarters.

“India’s mature policy response to this ‘once-in-a-century’ crisis thus provides important lessons for democracies to avoid myopic policymaking and demonstrates the significant benefits of focusing on long-term gains,” Chief Economic Adviser Krishnamurthy Subramanian said in the survey.

Krishnamurthy said the government ramped up its fiscal policy during the lockdown period in the face of extreme uncertainty around economic objectives. “favourable monetary policy ensured abundant liquidity and immediate relief to debtors via temporary moratoria, while unclogging monetary policy transmission,” the CEA said.

However, economists have noted that India’s actual fiscal stimulus as percentage of GDP was only 2 per cent, among the lowest in even developing countries and the lowest for a country of its economic size. That said, the Chief Economic Adviser argued in the Economic Survey that India’s demand-side policy underscored the “idea that pressing on the accelerator while the brakes are clamped only wastes scarce fuel.”

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