In the face of an unprecedented financial crisis brought on by the second wave of COVID-19, the Centre must support the retail sector to generate more opportunities for young, according to Hanumanthu Lajipathirai, former Vice-Chancellor of Dr. B.R. Ambedkar University and economist.
“Banks can assist such businesses in meeting their operational and working capital requirements. The banks may also rest certain that their loans would be repaid because the retail retail sector will continue to do well despite the current grim situation,” Mr. Lajipathirai stated.
According to him, the retail industry contributes 22% of the country’s GDP, which is expected to expand by 5.5 percent in the fiscal year 2021-22.
“With the impact of the second wave, the Indian economy has been in a state of historic recession. In the last 70 years, there has never been a situation like this. The Union government can instruct the Reserve Bank of India to adopt a more liberal loan policy in order to boost confidence in medium and small-scale enterprises, which are responsible for more jobs in rural and semi-urban areas.
The Union government’s announced packages should be implemented with zeal on the ground. Mr. Lajipathirai, who previously worked at the Indian Institute of Foreign Trade in New Delhi, believes that state governments should be trusted to help the central government achieve its aims. He also urged assistance for the agriculture, horticulture, and food processing businesses in order to jumpstart the rural economy.
Is India facing a recession in 2020?
With two consecutive quarters of negative growth, India experienced a recession for the first time in history in the first half of fiscal year 2020. In the first quarter of the fiscal year 2020-21, the gross domestic product (GDP) shrank by a historic 24.4 percent.
Is India experiencing a downturn?
India, which experienced a “very deep” recession last year, is expected to grow at 9.5 percent this year, making it the world’s fastest-growing economy in FY22, according to IMF Chief Economist Gita Gopinath.
Is there going to be a recession in 2021?
Unfortunately, a worldwide economic recession in 2021 appears to be a foregone conclusion. The coronavirus has already wreaked havoc on businesses and economies around the world, and experts predict that the devastation will only get worse. Fortunately, there are methods to prepare for a downturn in the economy: live within your means.
In 2021, what would India’s GDP be?
In its second advance estimates of national accounts released on Monday, the National Statistical Office (NSO) forecasted the country’s growth for 2021-22 at 8.9%, slightly lower than the 9.2% estimated in its first advance estimates released in January.
Furthermore, the National Statistics Office (NSO) reduced its estimates of GDP contraction for the coronavirus pandemic-affected last fiscal year (2020-21) to 6.6 percent. The previous projection was for a 7.3% decrease.
In April-June 2020, the Indian economy contracted 23.8 percent, and in July-September 2020, it contracted 6.6 percent.
“While an adverse base was expected to flatten growth in Q3 FY2022, the NSO’s initial estimates are far below our expectations (6.2 percent for GDP), with a marginal increase in manufacturing and a contraction in construction that is surprising given the heavy rains in the southern states,” said Aditi Nayar, Chief Economist at ICRA.
“GDP at constant (2011-12) prices is estimated at Rs 38.22 trillion in Q3 of 2021-22, up from Rs 36.26 trillion in Q3 of 2020-21, indicating an increase of 5.4 percent,” according to an official release.
According to the announcement, real GDP (GDP) or Gross Domestic Product (GDP) at constant (2011-12) prices is expected to reach Rs 147.72 trillion in 2021-22, up from Rs 135.58 trillion in the first updated estimate announced on January 31, 2022.
GDP growth is expected to be 8.9% in 2021-22, compared to a decline of 6.6 percent in 2020-21.
In terms of value, GDP in October-December 2021-22 was Rs 38,22,159 crore, up from Rs 36,22,220 crore in the same period of 2020-21.
According to NSO data, the manufacturing sector’s Gross Value Added (GVA) growth remained nearly steady at 0.2 percent in the third quarter of 2021-22, compared to 8.4 percent a year ago.
GVA growth in the farm sector was weak in the third quarter, at 2.6 percent, compared to 4.1 percent a year before.
GVA in the construction sector decreased by 2.8%, compared to 6.6% rise a year ago.
The electricity, gas, water supply, and other utility services segment grew by 3.7 percent in the third quarter of current fiscal year, compared to 1.5 percent growth the previous year.
Similarly, trade, hotel, transportation, communication, and broadcasting services expanded by 6.1 percent, compared to a decline of 10.1 percent a year ago.
In Q3 FY22, financial, real estate, and professional services growth was 4.6 percent, compared to 10.3 percent in Q3 FY21.
During the quarter under examination, public administration, defense, and other services expanded by 16.8%, compared to a decrease of 2.9 percent a year earlier.
Meanwhile, China’s economy grew by 4% between October and December of 2021.
“India’s GDP growth for Q3FY22 was a touch lower than our forecast of 5.7 percent, as the manufacturing sector grew slowly and the construction industry experienced unanticipated de-growth.” We have, however, decisively emerged from the pandemic recession, with all sectors of the economy showing signs of recovery.
“Going ahead, unlock trade will help growth in Q4FY22, as most governments have eliminated pandemic-related limitations, but weak rural demand and geopolitical shock from the Russia-Ukraine conflict may impair global growth and supply chains.” The impending pass-through of higher oil and gas costs could affect domestic demand mood, according to Elara Capital economist Garima Kapoor.
“Strong growth in the services sector and a pick-up in private final consumption expenditure drove India’s real GDP growth to 5.4 percent in Q3.” While agriculture’s growth slowed in Q3, the construction sector’s growth became negative.
“On the plus side, actual expenditure levels in both the private and public sectors are greater than they were before the pandemic.
“Given the encouraging trends in government revenues and spending until January 2022, as well as the upward revision in the nominal GDP growth rate for FY22, the fiscal deficit to GDP ratio for FY22 may come out better than what the (federal) budget projected,” said Rupa Rege Nitsure, group chief economist, L&T Financial Holdings.
“The growth number is pretty disappointing,” Sujan Hajra, chief economist of Mumbai-based Anand Rathi Securities, said, citing weaker rural consumer demand and investments as reasons.
After crude prices soared beyond $100 a barrel, India, which imports virtually all of its oil, might face a wider trade imbalance, a weaker rupee, and greater inflation, with a knock to GDP considered as the main concern.
“We believe the fiscal and monetary policy accommodation will remain, given the geopolitical volatility and crude oil prices,” Hajra added.
According to Nomura, a 10% increase in oil prices would shave 0.2 percentage points off India’s GDP growth while adding 0.3 to 0.4 percentage points to retail inflation.
Widening sanctions against Russia are likely to have a ripple impact on India, according to Sakshi Gupta, senior economist at HDFC Bank.
“We see a 20-30 basis point downside risk to our base predictions,” she said. For the time being, HDFC expects the GDP to rise 8.2% in the coming fiscal year.
Is the Indian economy in a slump?
In the year 2020, the Indian economy had its first-ever technical recession, with gross domestic product (GDP) growth lasting negative for two consecutive quarters. In the first quarter of the previous fiscal year, GDP shrank by a record 24.4 percent.
Is the Indian economy in trouble?
Instead, the economy has been in free fall, with GDP growth slowing each year from 2017 to 2020, inflation soaring, and unemployment reaching a new high of 23.5 percent in April 2020.
Is India’s economy getting better?
India has made great progress in eliminating absolute poverty since the 2000s. Over 90 million individuals were moved out of extreme poverty between 2011 and 2015.
Despite well-crafted fiscal and monetary policy support, the COVID-19 epidemic caused India’s economy to decline by 7.3 percent in FY21. Following the deadly’second wave,’ growth in FY22 is likely to be closer to the lower end of the range of 7.5 to 12.5 percent, keeping India among the world’s fastest-growing economies. The increasing rate of immunization will impact economic prospects this year and beyond. Agriculture and labor reforms that are implemented successfully will increase medium-term growth, while weakening household and corporate balance sheets may limit it. The outbreak-induced economic slowdown is thought to have had a major impact, particularly on poor and vulnerable people. Recent GDP per capita growth predictions, which account for the pandemic’s impact, suggest that poverty rates in 2020 will most likely return to 2016 levels.
The informal sector, which employs the vast bulk of India’s workforce, has been particularly hard hit. The epidemic has heightened risks for traditionally marginalized populations, like as youth, women, and migrants, in most countries. According to labor market indices, urban households are now more vulnerable to poverty than they were before the pandemic.
The government’s response to the COVID-19 epidemic was prompt and extensive. A national lockout was accompanied by a comprehensive policy package to reduce the impact on the poorest people (through various social protection measures) as well as small and medium businesses (through enhanced liquidity and financial support).
Before the outbreak of the COVID-19 pandemic, India’s economy had started to slow down after years of rapid growth. Between FY17 and FY20, GDP slowed from 8.3 percent to 4.0 percent, owing to banking sector vulnerabilities compounded by a drop in private consumption growth. The economy shrank by 7.3 percent in FY21.
In response to the COVID-19 shock, the government and the Reserve Bank of India implemented a number of monetary and fiscal policy measures to help vulnerable firms and households, expand service delivery (including increased spending on health and social protection), and mitigate the economic impact of the crisis. The economy is forecast to improve, thanks in part to these proactive steps, with a large base effect materializing in FY22 and growth stabilizing at around 7% thereafter.
How long do economic downturns last?
A recession is a long-term economic downturn that affects a large number of people. A depression is a longer-term, more severe slump. Since 1854, there have been 33 recessions. 1 Recessions have lasted an average of 11 months since 1945.
Is a recession expected in 2023?
Rising oil prices and other consequences of Russia’s invasion of Ukraine, according to Goldman Sachs, will cut US GDP this year, and the probability of a recession in 2023 has increased to 20% to 30%.
What is the state of our economy right now?
Indeed, the year is starting with little signs of progress, as the late-year spread of omicron, along with the fading tailwind of fiscal stimulus, has experts across Wall Street lowering their GDP projections.
When you add in a Federal Reserve that has shifted from its most accommodative policy in history to hawkish inflation-fighters, the picture changes dramatically. The Atlanta Fed’s GDPNow indicator currently shows a 0.1 percent increase in first-quarter GDP.
“The economy is slowing and downshifting,” said Joseph LaVorgna, Natixis’ head economist for the Americas and former chief economist for President Donald Trump’s National Economic Council. “It isn’t a recession now, but it will be if the Fed becomes overly aggressive.”
GDP climbed by 6.9% in the fourth quarter of 2021, capping a year in which the total value of all goods and services produced in the United States increased by 5.7 percent on an annualized basis. That followed a 3.4 percent drop in 2020, the steepest but shortest recession in US history, caused by a pandemic.