India within striking distance of attaining positive growth: RBI

India’s GDP is within the striking distance of attaining positive growth, said the Reserve Bank of India (RBI) observing that the letter ‘V’ in the V-shaped recovery stands for vaccine.

The government had launched the world’s biggest Covid-19 vaccination drive on January 16.

“What will 2021 look like? The shape of the recovery will be V-shaped after all and the ‘V’ stands for vaccine,” said an article on the ‘state of economy’ in the RBI’s January Bulletin.

“If successful, it will tilt the balance of risks upwards,” said the authors, including RBI Deputy Governor Michael Debabrata Patra.

‘Views personal’

The RBI, however, said the views expressed in this article are those of the authors and do not necessarily represent the views of the central bank.

E-commerce and digital technologies will likely be the bright spots in India’s recovery in a world in which there will be rebounds for sure, but pre-pandemic levels of output and employment are a long way off, they said.

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The article further said: “Recent shifts in the macro-economic landscape have brightened the outlook, with GDP in striking distance of attaining positive territory and inflation easing closer to the target.” India’s GDP is estimated to contract by a record 7.7 per cent during 2020-21 as the Covid-19 pandemic severely hit the key manufacturing and services segments, as per government projections released earlier this month.

The economy contracted by a massive 23.9 per cent in the first quarter and 7.5 per cent in the second quarter on account of the Covid-19 pandemic.

The article added that in the first half of 2021-22, GDP growth will benefit from statistical support and is likely to be mostly consumption-driven.

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“India being the global capital for vaccine manufacturing, pharmaceuticals exports are expected to receive a big impetus with the start of vaccination drives globally. Agricultural exports remain resilient and under the recent production linked (PLI) scheme, food processing industry has been accorded priority,” it said.

Harnessing the synergies by transforming low-value semi-processed agri products through food processing would not only improve productivity but also boost India’s competitiveness, it added.