Commonwealth Business Communications
  • HOME
  • ABOUT
  • COUNTRIES
    • AFRICA
      • BOTSWANA
      • CAMEROON
      • GAMBIA
      • GHANA
      • KENYA
      • KINGDOM OF eSWATINI
      • LESOTHO
      • MALAWI
      • MAURITIUS
      • MOZAMBIQUE
      • NAMIBIA
      • NIGERIA
      • RWANDA
      • SEYCHELLES
      • SIERRA LEONE
      • SOUTH AFRICA
      • TANZANIA
      • UGANDA
      • ZAMBIA
    • ASIA
      • BANGLADESH
      • BRUNEI DARUSSALAM
      • INDIA
      • MALAYSIA
      • MALDIVES
      • PAKISTAN
      • SINGAPORE
      • SRI LANKA
    • CARIBBEAN AND AMERICAS
      • ANTIGUA AND BARBUDA
      • BAHAMAS
      • BARBADOS
      • BELIZE
      • CANADA
      • DOMINICA
      • GRENADA
      • GUYANA
      • JAMAICA
      • SAINT LUCIA
      • ST KITTS AND NEVIS
      • ST VINCENT AND THE GRENADINES
      • TRINIDAD AND TOBAGO
    • EUROPE
      • CYPRUS
      • MALTA
      • UNITED KINGDOM
    • PACIFIC
      • AUSTRALIA
      • FIJI
      • KIRIBATI
      • NAURU
      • NEW ZEALAND
      • PAPUA NEW GUINEA
      • SAMOA
      • SOLOMON ISLANDS
      • TONGA
      • TUVALU
      • VANUATU
  • AREAS OF WORK
    • GOVERNMENT
    • EDUCATION
    • HEALTH
    • ICT
    • INFRASTRUCTURE DEVELOPMENT
    • NATURAL RESOURCES
    • SUSTAINABLE DEVELOPMENT GOALS
    • TRADE AND INVESTMENT
  • OUR PUBLICATIONS
    • CHOGM
      • COMMONWEALTH HEADS OF GOVERNMENT INTERIM REPORT 2020
      • THE COMMONWEALTH HEADS OF GOVERNMENT MEETING 2018 REPORT
      • THE COMMONWEALTH HEADS OF GOVERNMENT MEETING 2015 REPORT
      • THE COMMONWEALTH HEADS OF GOVERNMENT MEETING 2011 REPORT
      • THE COMMONWEALTH HEADS OF GOVERNMENT MEETING 2009 REPORT
      • THE COMMONWEALTH HEADS OF GOVERNMENT MEETING 2007 REPORT
    • HEALTH
      • COMMONWEALTH HEALTH REPORT 2022
      • COMMONWEALTH HEALTH REPORT 2020
    • EDUCATION
      • COMMONWEALTH EDUCATION REPORT 2021
      • COMMONWEALTH EDUCATION REPORT 2019
    • MINISTERS
      • MINISTERS REFERENCE BOOK COMMONWEALTH 2017
      • MINISTERS REFERENCE BOOK COMMONWEALTH 2015
      • MINISTERS REFERENCE BOOK COMMONWEALTH 2014
      • COMMONWEALTH MINISTERS REFERENCE BOOK 2011
      • COMMONWEALTH MINISTERS REFERENCE BOOK 2010
      • COMMONWEALTH MINISTERS REFERENCE BOOK 2009
      • COMMONWEALTH MINISTERS REFERENCE BOOK 2008
      • COMMONWEALTH MINISTERS REFERENCE BOOK 2007
    • FINANCE
      • COMMONWEALTH FINANCE MINISTERS REPORT 2012
      • COMMONWEALTH FINANCE MINISTERS REFERENCE REPORT 2010
      • COMMONWEALTH FINANCE MINISTERS REFERENCE REPORT 2009
      • COMMONWEALTH FINANCE MINISTERS REFERENCE REPORT 2008
      • COMMONWEALTH FINANCE MINISTERS REFERENCE REPORT 2007
    • TRADE AND INVESTMENT
      • AFRICA INFRASTRUCTURE INVESTMENT REPORT 2013
    • QUEEN AND COMMONWEALTH
      • QUEEN & COMMONWEALTH: CELEBRATING HER MAJESTY’S PLATINUM JUBILEE
      • QUEEN & COMMONWEALTH: 90 GLORIOUS YEARS
      • QUEEN & COMMONWEALTH: CELEBRATING HER MAJESTY’S DIAMOND JUBILEE
  • CONTRIBUTORS
  • CONTACT US
Commonwealth Business Communications
Commonwealth Business Communications
  • HOME
  • ABOUT
  • COUNTRIES
    • AFRICA
      • BOTSWANA
      • CAMEROON
      • GAMBIA
      • GHANA
      • KENYA
      • KINGDOM OF eSWATINI
      • LESOTHO
      • MALAWI
      • MAURITIUS
      • MOZAMBIQUE
      • NAMIBIA
      • NIGERIA
      • RWANDA
      • SEYCHELLES
      • SIERRA LEONE
      • SOUTH AFRICA
      • TANZANIA
      • UGANDA
      • ZAMBIA
    • ASIA
      • BANGLADESH
      • BRUNEI DARUSSALAM
      • INDIA
      • MALAYSIA
      • MALDIVES
      • PAKISTAN
      • SINGAPORE
      • SRI LANKA
    • CARIBBEAN AND AMERICAS
      • ANTIGUA AND BARBUDA
      • BAHAMAS
      • BARBADOS
      • BELIZE
      • CANADA
      • DOMINICA
      • GRENADA
      • GUYANA
      • JAMAICA
      • SAINT LUCIA
      • ST KITTS AND NEVIS
      • ST VINCENT AND THE GRENADINES
      • TRINIDAD AND TOBAGO
    • EUROPE
      • CYPRUS
      • MALTA
      • UNITED KINGDOM
    • PACIFIC
      • AUSTRALIA
      • FIJI
      • KIRIBATI
      • NAURU
      • NEW ZEALAND
      • PAPUA NEW GUINEA
      • SAMOA
      • SOLOMON ISLANDS
      • TONGA
      • TUVALU
      • VANUATU
  • AREAS OF WORK
    • GOVERNMENT
    • EDUCATION
    • HEALTH
    • ICT
    • INFRASTRUCTURE DEVELOPMENT
    • NATURAL RESOURCES
    • SUSTAINABLE DEVELOPMENT GOALS
    • TRADE AND INVESTMENT
  • OUR PUBLICATIONS
    • CHOGM
      • COMMONWEALTH HEADS OF GOVERNMENT INTERIM REPORT 2020
      • THE COMMONWEALTH HEADS OF GOVERNMENT MEETING 2018 REPORT
      • THE COMMONWEALTH HEADS OF GOVERNMENT MEETING 2015 REPORT
      • THE COMMONWEALTH HEADS OF GOVERNMENT MEETING 2011 REPORT
      • THE COMMONWEALTH HEADS OF GOVERNMENT MEETING 2009 REPORT
      • THE COMMONWEALTH HEADS OF GOVERNMENT MEETING 2007 REPORT
    • HEALTH
      • COMMONWEALTH HEALTH REPORT 2022
      • COMMONWEALTH HEALTH REPORT 2020
    • EDUCATION
      • COMMONWEALTH EDUCATION REPORT 2021
      • COMMONWEALTH EDUCATION REPORT 2019
    • MINISTERS
      • MINISTERS REFERENCE BOOK COMMONWEALTH 2017
      • MINISTERS REFERENCE BOOK COMMONWEALTH 2015
      • MINISTERS REFERENCE BOOK COMMONWEALTH 2014
      • COMMONWEALTH MINISTERS REFERENCE BOOK 2011
      • COMMONWEALTH MINISTERS REFERENCE BOOK 2010
      • COMMONWEALTH MINISTERS REFERENCE BOOK 2009
      • COMMONWEALTH MINISTERS REFERENCE BOOK 2008
      • COMMONWEALTH MINISTERS REFERENCE BOOK 2007
    • FINANCE
      • COMMONWEALTH FINANCE MINISTERS REPORT 2012
      • COMMONWEALTH FINANCE MINISTERS REFERENCE REPORT 2010
      • COMMONWEALTH FINANCE MINISTERS REFERENCE REPORT 2009
      • COMMONWEALTH FINANCE MINISTERS REFERENCE REPORT 2008
      • COMMONWEALTH FINANCE MINISTERS REFERENCE REPORT 2007
    • TRADE AND INVESTMENT
      • AFRICA INFRASTRUCTURE INVESTMENT REPORT 2013
    • QUEEN AND COMMONWEALTH
      • QUEEN & COMMONWEALTH: CELEBRATING HER MAJESTY’S PLATINUM JUBILEE
      • QUEEN & COMMONWEALTH: 90 GLORIOUS YEARS
      • QUEEN & COMMONWEALTH: CELEBRATING HER MAJESTY’S DIAMOND JUBILEE
  • CONTRIBUTORS
  • CONTACT US

India projected to be one of fastest recovering economies

  • CBC News Team
Total
0
Shares
0
0
0

India was among the fastest-growing economies in the world in the decade before the pandemic, lifting millions out of poverty. While the economy was moderating prior to the COVID-19 shock, the pandemic implied unprecedented challenges. Two COVID-19 waves caused a health and economic crisis however, the economy is gradually recovering. Following the first wave, GDP contracted an unprecedented 7.3 per cent in FY2020/21. The second wave resulted in another sharp fall in activity, albeit smaller and shorter, and recent high frequency indicators suggest an ongoing recovery. Inflation pressures have been elevated, yet inflation eased to 5.6 per cent in July, returning to within the RBI’s inflation target of 4±2 per cent, driven by softer food prices and base effects.

The authorities’ economic response, which was swift and substantial, has included fiscal support, including scaled-up support to vulnerable groups, monetary policy easing, liquidity provision, and accommodative financial sector and regulatory policies. Despite the pandemic, the authorities have continued to introduce structural reforms, including labour reforms and a privatisation plan.

Growth is projected at 9.5 per cent in FY2021/22 and 8.5 per cent in FY2022/23. Headline inflation is projected at 5.6 per cent in FY2021/22, amid elevated price pressures. The contraction in economic activity, lower revenue, and pandemic-related support measures are estimated to have led to a widening of the fiscal deficit to 8.6 and 12.8 per cent of GDP in FY2020/21 for the central and general governments, respectively. Fiscal policy continues to support the economy in FY2021/22. Despite policy support, bank credit growth has remained subdued, while large corporates have benefited from easier conditions in capital markets. Net inflows and improvement in the current account have supported an increase in foreign exchange reserves. The current account balance is projected to return to a deficit of about 1 per cent of GDP in FY2021/22, due to a gradual recovery in domestic demand and higher oil prices.

The economic outlook remains clouded due to pandemic-related uncertainties contributing to both downside and upside risks. A persistent negative impact of COVID-19 on investment, human capital, and other growth drivers could prolong the recovery and impact medium-term growth. While India benefits from favourable demographics, disruption to access to education and training due to the pandemic could weigh on improvements in human capital. At the same time, the recovery could also be faster than expected. Faster vaccination and better therapeutics could help contain the spread and limit the impact of the pandemic. In addition, successful implementation of the announced wide-ranging structural reforms could increase India’s growth potential.

IMF Assessment

The International Monetary Fund welcomed the recent economic recovery and noted that India is projected to be one of the fastest growing major economies for this year and beyond. The IMF further commended the authorities’ response to the pandemic which includes scaled-up support to vulnerable groups, monetary policy easing and liquidity provision, accommodative financial sector, and regulatory policies, and continued structural reforms. The IMF encouraged the authorities to maintain the scaled-up vaccination momentum, continue with policy accommodation until the recovery is fully entrenched, and accelerate structural reforms to achieve a more inclusive and sustainable growth, while keeping public debt vulnerabilities in check.

It was agreed that addressing the health crisis remains a near-term policy priority. In that context, they welcomed the recent increase in vaccinations. They also positively noted India’s contributions to the global fight against the pandemic as a vaccine producer.

The IMF indicated that further fiscal support underpinned by targeted spending on social protection, employment support and health spending is warranted until the recovery is secure. They encouraged the authorities to increase public expenditure in infrastructure, education, health, and social safety nets which can also help achieve the Sustainable Development Goals and boost potential growth. Fiscal space can be enhanced through a credible and clearly communicated medium-term fiscal consolidation strategy, enhancements in expenditure efficiency, improved public financial management and revenue enhancing measures, as well as the privatisation agenda.

It was further agreed that maintaining accommodative monetary policy remains appropriate, although elevated inflation pressures need to be closely monitored. Looking ahead, a well-communicated plan for a gradual reduction in monetary policy support as the recovery strengthens would foster orderly market transitions.

Also welcomed was the authorities’ commitment to maintain exchange rate flexibility, which can serve as the main shock absorber, with foreign exchange interventions limited to addressing disorderly market conditions.

Financial sector policies have also moderated the adverse impact of the pandemic. While targeted support to viable corporates should continue, they indicated that policies facilitating the exit of non-viable firms are also warranted. The IMF observed that ensuring adequate bank capitalisation and effective NPL resolution will enable the financial system to further increase its resilience and better support the recovery.

Lastly, the IMF commended the authorities for advancing structural reforms despite the pandemic and stressed the need for their steadfast implementation. Long-standing reform priorities include ongoing labour and land reforms, infrastructure investment, improvements in governance, continued trade and investment liberalisation, and improving education outcomes. Such reforms would not only help maximise India’s long-term growth and demographic dividend, but also help alleviate poverty and inequality, and deepen the country’s integration into global value chains. India’s progress toward transitioning to a greener and more inclusive economy is welcome.

Learn More: International Monetary Fund

Share this:

  • Click to share on Twitter (Opens in new window)
  • Click to share on Facebook (Opens in new window)
CBC News Team

Previous Article

TUBERCULOSIS DEATHS RISE AGAIN BECAUSE OF PANDEMIC

  • CBC News Team
Read More
Next Article

FOSSIL FUEL PLANS OUT OF SYNC WITH PARIS AGREEMENT

  • CBC News Team
Read More
You May Also Like
Celebrating Sri Lanka Independence Day
Read More
  • ASIA
  • SRI LANKA

Celebrating Sri Lanka Independence Day

  • CBC News Team
  • 4 February 2023
Pakistan pens education deal with Hong Kong
Read More
  • Education & Youth
  • ASIA
  • PAKISTAN

Pakistan pens education deal with Hong Kong

  • CBC News Team
  • 13 January 2023
Extra funding announced for Pakistan flood-hit areas
Read More
  • Natural Resources
  • Trade & Investment
  • Environment & Sustainability
  • UNITED KINGDOM
  • PAKISTAN

Extra funding announced for Pakistan flood-hit areas

  • CBC News Team
  • 11 January 2023
Malaysia dengue fever fight suffers twofold surge
Read More
  • Health
  • MALAYSIA

Malaysia dengue fever fight suffers twofold surge

  • CBC News Team
  • 9 January 2023
India aids 150 COVID-19 affected countries
Read More
  • Health
  • INDIA

India aids 150 COVID-19 affected countries

  • CBC News Team
  • 6 January 2023
Commonwealth mourns late Queen Elizabeth II
Read More
  • Queen & Commonwealth
  • BANGLADESH
  • INDIA
  • GHANA
  • NEW ZEALAND
  • CANADA
  • PAKISTAN
  • JAMAICA
  • SOUTH AFRICA

Commonwealth nations mourn late Queen Elizabeth II

  • CBC News Team
  • 14 September 2022
Education Ministers united to overcome educational challenges
Read More
  • Education & Youth
  • Education Reports
  • Heads of Government
  • ASIA
  • EDUCATION

Ministers united towards more resilient education

  • CBC News Team
  • 6 September 2022
Malaysia Flag
Read More
  • MALAYSIA

Celebrating Malaysia Independence Day

  • CBC News Team
  • 31 August 2022
OUR LATEST PUBLICATION

Subscribe to our Newsletter

PARTNER FOCUS
Recent Posts
  • Celebrating Sri Lanka Independence Day
    Celebrating Sri Lanka Independence Day
  • Nigerian communities file pollution case against Shell
    Nigerian communities file pollution case against Shell
  • Australian banknote Currency - Cash
    Australia removes monarch from banknotes
  • Flag of Nauru
    Celebrating Nauru Independence Day

Subscribe

Subscribe now to our newsletter

Commonwealth Business Communications
  • HOME
  • About
  • Contact
  • Terms of Use
  • Privacy Policy
  • Cookie Policy
© 2022 Commonwealth Business Communications Limited. All Rights Reserved.

Input your search keywords and press Enter.