Script: ADITYA RAJ DAS, Senior Economic Journalist
At this juncture when the ongoing COVID-19 pandemic is having a devastating effect on the global economy across the board, there is now growing optimism over the revival in the growth momentum of the Indian economy. The robust assessment of the resurgence of growth momentum of Indian economy has come from no less a body than the International Monetary Fund (IMF).
IMF has raised India’s growth projection for 2021-22 to 12.5 per cent from its January estimate of 11.5 per cent making it the fastest-growing economy in the world. This projection of IMF reflects inherent resilience of Indian economy to overcome any setback in the normal economic development process.
What is significant is that the latest upgrade from the IMF for India’s economy comes on the backdrop of a surge in COVID 19 infections, which have prompted some local lockdowns and could have an impact on overall growth.
The World Bank had recently forecast the Indian economy to grow in the 7.5 per cent to 12.5 per cent range in 2021-22, given the significant uncertainty at this stage about both epidemiological and policy developments. It had also stated that Bank expects India’s economy to grow more than 10.1 per cent in 2021-22– a sharp upward revision of 4.7 percentage points from its January 2021 forecast.
Keeping in tune with an assessment of the world’s two top economic bodies– the World Bank and IMF– the RBI has come out with a 10.5 per cent GDP growth projection for 2021-22. What is quite significant that top Indian policymakers overwhelmingly feel that there is no need to have apprehension whether the RBI’s GDP growth projection for the Indian economy for 2021-22 can be achieved.
Most economists are of the view that the country is better prepared to deal with the second wave of the pandemic with the vaccination progressing at a brisk pace. From a global perspective, what is quite significant is that the IMF’s World Economic Outlook showed that China is projected to grow 8.4 per cent in 2021 and 5.6 per cent next year. India at 6.9 per cent is also expected to grow faster than China in 2022-23 and retain its title as the fastest-growing major economy for the second consecutive year. For 2021-22 if the IMF’s projection is realised, then India would be the only major economy to post double-digit growth.
The report has noted that due to unprecedented policy response by major economies including that of India, the COVID 19 recession is likely to have smaller scars than the 2008 global financial crisis.
Reiterating its optimism for a surge in the growth momentum of the Indian economy the RBI has vowed to continue with the accommodative stance as long as necessary to sustain growth on a durable basis and continue to mitigate the impact of COVID on the economy.
Economists feel that RBI’s assertion that the focus of the monetary policy will be to further expand economic revival consolidating the gains achieved so far and sustaining the impulse of growth in the current fiscal 2021-22 will have a soothing effect on the process of growth momentum of the Indian economy.
As the RBI Governor Shaktikanta Das said, a key aspect of the RBI’s strategy will be to strengthen the bedrock of macroeconomic stability that has anchored the Indian economy’s revival from the pandemic.
At the global level, there has been a growing trend to acknowledge the inherent potential of the Indian economy and its benevolent impact on the global economy. For instance, the IMF a few years before the outbreak of the COVID pandemic had profusely lauded the inherent strength of the Indian economy by forecasting India will be a source of growth for the global economy for the next few decades.
The expectation of rapid GDP growth in the coming years and the ongoing growth momentum of the Indian economy has fuelled hopes that India will feature among the top economies of the world.
It is being increasingly felt that the ongoing COVID pandemic will ultimately fade out. The growing surge in the growth momentum of the Indian economy will only gather further speed with the Indian government embarking on the pursuit of necessary and innovative policy initiatives in the wide spectrum of the economy to boost the overall GDP growth.