In May 2020, barely two months after the lockdown began, I wrote in a column published by a Malayalam daily that India would enter a prosperous time after the pandemic. The following quarter saw an expectedly significant contraction in India’s GDP. The following quarter saw a GDP growth of 7.5 per cent on a year-on-year basis. That showed the economy could rebound sharply soon. The nationwide lockdown, factory closure for many weeks and massive job losses wouldn’t have meant anything else.
The government acted on time with the launch of many schemes under AtmaNirbhar Bharat. The Reserve Bank also acted harmoniously with the government announcements. The combined action made Rs 27.1 trillion available for keeping the economy stable and on the path of revival. According to government estimates, 800 million people got free food grain; 40 million farmers got direct transfer benefits and 80 million families got free cooking gas during the pandemic period. Then the second wave did not start. India carried out the world’s biggest free food programme and vaccination.
India’s Covid-19 vaccination exceeded 218.80 crores. The free food supply is continuing. The freebies may not have apparently contributed to the growth of the economy. Nevertheless, the freebies left a positive impact on the socio-economy. The poor did not starve in the days of Covid-19.
In the early stage of the pandemic, India was unreasonably over-cautious and imposed a strict lockdown. That rendered an adverse socio-economic impact. The horrendous second wave of Covid-19, after a brief attempt to return to normal situation shattered all hopes. Many micro business units remained shut. Millions of small borrowers got the benefit of the government’s Rs 3 trillion collateral-free automatic loans. While some factories closed forever, some could revive later and some units flourished. Still, there is no exact number of closed units and an exact number of job losses.
Unfortunate people had to readjust to the new situation for survival. And this section is now returning to normal life, though they are confronting inflation. Though India still has in hand the task of repairing the socio-economic damage, the economic activities have gained heat. The festival extravaganza, which was missing for two years, is an indication of revival. Asset prices are moving to a realistic level with the availability of cheaper homes. The trend of revival gives a new hope though inflation sucks away the pocket of the middle and low-income class.
Though the stock prices have been moving erratically, experts say the undertone is bullish. The inflation in the US market that compelled the Fed rate hike of 225 basis points in six months, the energy crisis in Europe due to the cut in Russian gas supply and China’s massive economic slowdown made the global economy bleed. China faces multiple crises as the world begins to disbelieve its policies. Its shipment during the early stage of Covid-19 made Europe and the western world exercise caution. On the other hand, the big global brands, once reluctant to set up a base in India, are shifting their work sites from China to India.
The Reserve Bank projects the Indian economy to grow seven per cent in the current financial year. All the predictions indicate India’s GDP growth to be the best in the world. During the same period, the global economy may grow by 1.7 per cent. China’s GDP may grow by 3.2 per cent during the period. Now the Indian economy has become the fifth largest in the world at $854.7 billion surpassing the $816-billion UK economy. As a growing economy with increasing global clout, India is set to be the third largest economy in the world by 2029. It can be earlier also since India is fast becoming a global manufacturing hub with convincingly better policy reliability and business culture. We have seen global electronic giants like Apple and Samsung, besides European companies, planning to shift their manufacturing base to India.
Superpower in economy and military, India is entering a faster track. The roll-out of 5G will encourage innovation in many business segments, setting the country itself for making it a hub of innovation and business opportunities.
