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The Finance Ministry on Saturday announced that India has achieved full recovery of pre-pandemic output level in the second quarter of the financial year 2021-22. It expressed optimism about the economy achieving pre-Covid output for the full financial year. However, it did admit that Omicron, the new variant of Covid, posed challenges to sustained recovery.
“The Covid-19 pandemic has led to considerable human and economic costs setting countries back on their developmental goals. The year 2021 is thus a ‘catch-up’ year for the global economy including India, trying to recover the pre-pandemic output level of 2019. India has not only caught up with its pre-pandemic output of Q2, but is also expected to do so for the full year,” the Monthly Economic Review (MER), prepared by the Economic Affairs Department, said.
These remarks come after India recorded growth of 8.4 per cent in the July-September quarter against a de-growth of 7.4 per cent in the corresponding period last fiscal and 20.1 per cent in the April-June quarter of current fiscal.
An analysis by SBI said that in April-September (H1) period of 2020-21, the country exhibited real GDP loss of ₹11.4-lakh crore (on a y-o-y basis). The situation has improved in FY22, and in H1FY22m the real gain was around ₹8.2 lakh crore.
4 quarters of growth
The MER said India is among the few countries that have recorded four consecutive quarters of growth amid the pandemic (Q3, Q4 of FY21 and Q1, Q2 of FY22). The Q2 output at ₹35.7-lakh crore achieved full recovery in real terms compared with the corresponding pre-pandemic output level in Q2 of FY20 at ₹35.6-lakh crore. Growth in H1 (Q1+Q2) of 2021-22 accordingly works out to 13.7 per cent over H1 of 2020-21.
It also mentioned, quoting Monetary Policy Committee (MPC) statement, that an RBI Governor-led committee has maintained the growth forecast of 9.5 per cent during FY22, implying a full recovery and a 1.6 per cent growth over pre-pandemic GDP level of FY 2019-20.
The report said major multi-lateral and credit rating agencies expect India to grow between 8 per cent-10 per cent in FY 22 and between 7 and 10 per cent in FY 23.
However, “the new Omicron variant of Covid-19 poses a challenge to sustained recovery. That said, the economy is better prepared to work with Covid, with rapidly growing vaccination coverage and lessons learnt from second wave in containing the contagion,” it said.
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