A year after Covid, is the worst behind us?

Our Bureau. Mumbai | Updated on January 25, 2021

India’s economy is gradually coming out of the woods after the Covid-19 pandemic. The advent of vaccines and a sustained decline in fresh infections have stirred optimism that the worst may be over.

The BSE Sensex may have scaled the 50,000 mark based on such optimism, but there’s still miles to go for all sectors to return to pre-Covid-19 normalcy. The recovery in recent months has been uneven and fragile.

Advance estimates expect the economy, as measured by the Gross Domestic Product (GDP), to contract by 7.7 per cent this fiscal. It is expected to bounce back to positive territory in 2021-22, thanks to the low base effect. Over the course of last year, the government already announced a series of relief measures to boost consumption and ease credit flow into the economy. With Finance Minister Nirmala Sitharaman set to present the Budget 2021-22 in just about a week, expectations are high that the government will help fast-track the recovery and offer some relief to sectors that remain affected.

Strong headwinds

The middle class, for one, is hoping for some more support following a year of salary cuts and contracting job opportunities. Contact-intensive sectors such as retail trade, tourism, aviation and hospitality continue to face strong headwinds in the absence of a demand spurt, just like other employment-intensive sectors like real estate.

For the government, the challenge is to meet such expectations from several quarters, while arresting the decline in revenues and keeping the rising fiscal deficit in check. The possibility of a special Covid cess or surcharge to fund the country’s pandemic response, also looms large.

Amid these expectations, BusinessLine will host Countdown to Budget 2021 on January 27 at 4:30 pm. In view of the ongoing pandemic and social-distancing needs, this year’s event is in the form of a webinar.

Powered by HDFC Bank with the theme of ‘Unleashing the Animal Spirit in a Pandemic hit Economy’, the conference will bring together key thought leaders and captains of industry to discuss what needs to be done further to bolster the economy.

Uday Kotak, Managing Director and CEO, Kotak Mahindra Bank, and President, Confederation of Indian Industry (CII), will deliver the keynote address.

This will be followed by a panel discussion of industry leaders, bankers, stakeholders and experts. The panellists include R Mukundan, Managing Director, Tata Chemicals and Chairman, CII National Committee on CSR; Neeru Ahuja, Tax Expert and Partner, Deloitte India; Dharmakriti Joshi, Chief Economist, CRISIL; Rahul Shukla, Group Head, Wholesale Banking, HDFC Bank; and Shinjini Kumar, Co-Founder, SALT.

The discussion will be moderated by Aarati Krishnan, Editorial Consultant, Businessline.

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Published on January 25, 2021
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