India's post-pandemic potential growth could be pushed higher

We need deeper structural changes to drive more investments, raise productivity and enhance women's labour participation

- NIRANJAN RAJADHYAKSHA

Three years have now passed since the pandemic brought the world to a standstill. Economic activity collapsed. India was no exception. The economic recovery around the world has been uneven. India has managed to avoid the inflationary surge that many rich countries are battling as well as the balance-of-payments crises that have brought many of our neighbours to their knees.

However, economic output is still below where it would have been in case there had been no pandemic-a gap of around $350 billion. Think of this as a permanent output loss. Millions who left the labour force have not yet rejoined it. The labour force participation ratio is still below its level before the pandemic. Despite such lingering pain, India managed to negotiate the storm better than most countries.

How does the road ahead look? It is sometimes useful to peer into the rear-view mirror before focusing on what can be seen through the windshield. Indian economic growth began to accelerate in 1980. The average speed of economic progress in the three decades since then has been 6.3%. This anchor number needs to be kept in mind by those who expect the Indian economy to accelerate during this decade as well as those who write about a deceleration.