How To Sustain The Recovery

While the second quarter numbers suggest the Indian economy is on the mend, high inf lation, sluggish demand and a jobs squeeze remain areas of concern. Experts weigh in on how to ensure vigorous and sustainable economic growth

- M.G. Arun & Shwweta Punj

INDIA’S HIGHLY-ANTICIPATED second quarter (Q2) GDP numbers for fiscal year (FY) 2021-22, announced on November 30, brought plenty of cheer. For the first time since the Covid virus devastated the economy, the Q2 growth figure was back to pre-pandemic levels. Real GDP in Q2 grew 8.4 per cent, matching the output in the corresponding quarter in FY2019-20, before the pandemic struck. This indicated that the Indian economy was on the road to recovery. The Union finance ministry’s monthly review of the economy for November optimistically stated, ‘India is among the few countries that have recorded four consecutive quarters of growth amid Covid-19 (Q3, Q4 of FY202021 and Q1, Q2 of FY2021-22), reflecting the resilience of the Indian economy. The recovery was driven by a revival in services, full recovery in manufacturing and sustained growth in the agriculture sectors.’ The challenge now is to ensure a robust and sustained recovery—and the road ahead is nothing less than arduous.

The half yearly (H1) growth for 2021-22 was promising but when compared to the pre-pandemic year of 2019-20, there was still plenty of catching up to do. Experts point out that even before the pandemic struck, the GDP growth was on the decline and had averaged a low 4-5 per cent. India needed to set a much higher benchmark for full recovery. “A V-shaped recovery is nothing to crow about,” said Raghuram Rajan, former RBI (Reserve Bank of India) governor, in an interview to india today TV. “Create a bad enough downturn and the recovery will always be V-shaped. [The important question] is, have we come out of the malaise and will we return to our trend level of growth? We should be growing at 8 or 9 per cent.”