How is India recovering from the economic crisis after Covid-19
In the April-June quarter of 2020, economies worldwide experienced a severe recession. India's real GDP (Gross Domestic Product) dropped by 23.9 per cent in the third quarter, a record low, with the Reserve Bank of India (RBI) describing it as a "historic technical recession." There was a huge economic crisis in India. Inflation made matters worse.
Official data revealed that the Indian economy had entered a technical recession by October 2020. The gross domestic product (GDP) has been clawing its way back since then. As a result, it was predicted that India's growth rebound would pick up the pace at the start of 2021. Concerns regarding Covid-19 had also taken a back seat at the time. However, a second Covid wave threw everything off.
Now, the economy is recovering despite the obstacles produced by the Delta COVID-19 version. During the epidemic, economic growth has often exceeded predictions, and people and companies have maintained a remarkable level of activity and expenditure.
Prime Minister Narendra Modi has announced plans for a huge vaccination campaign and a host of tax breaks to help the industrial sector.
According to figures provided by the National Statistics Office, GDP increased by 0.4% in October-December 2020 compared to the same period the previous year. Compared to revised contractions of 7.3 percent in July-September and 24.4 percent in April-June, this is a significant improvement. Investment increased for the first time since December 2019, rising by 2.6 percent compared to a revised 6.8% drop in the previous quarter as consumer demand improved.
According to data, consumer expenditure, the economy's major driver, fell 2.4 percent year over year in October-December, compared to an 11.3 percent drop the previous quarter. After the release of the GDP figures, which it said demonstrated a continuous V-shaped recovery, the economy has returned to "pre-pandemic times of positive growth rates," according to a statement from the finance ministry.
Contribution of the Union Budget 2022
"India's Union Budget 2022 is the country's first post-pandemic budget, and it comes as the government attempts to resurrect growth and jobs following one of the country's worst economic downturns in recent memory. Faced with this huge undertaking, the budget proposes a bold package of policies that will give the Indian economy a boost and much-needed fiscal help, even if it means floating bigger deficits for a while.
Healthcare and infrastructure stand out as key budget priorities, with significant spending to help India lay the groundwork for public-health resilience and economic growth. The attempt to privatise public-sector banks and lift the foreign direct investment (FDI) stock caps on the insurance sector from 49 to 74 percent has also been well received by international investors.
Both are significant and long-overdue initiatives, indicating that Delhi is still interested in economic reform. The loosening of restrictions governing "one-person firms" is another bright aspect worth noting.
New Policies that Helped Recover the Indian Economy
With a fiscal boost of 20 trillion rupees or nearly 10% of GDP, the government's crisis reaction has minimised damage. The Reserve Bank of India also pursued a bold expansionary monetary policy. Despite this, banks only used 520 billion rupees out of the 3 trillion rupee emergency guaranteed credit window.
The recovery based on investment and consumption has come to a halt. In fact, the epidemic has worsened these trends. Government attempts to reduce adversity through macroeconomic policy (fiscal stimulus and monetary loosening) have been considerable. Still, the fiscal room is running out, necessitating the World Bank and other international financial institutions to step in and help forestall even greater misery. In addition, continuing progress toward structural economic policy reforms must be maintained.
To know more about the economic crisis and how India is recovering from it, a person needs to understand the economy of the country in detail. One can take the help of wealth management courses available on various platforms to understand Union Budget 2022 better. In fact, a good wealth management course in India covers all these aspects, thereby giving you proper information about the country’s economy and how it will affect you.