Editorial: Beyond the GDP numbers
The latest data on the first quarter of the current financial year 2021-22 shows a big jump in the gross domestic product (GDP), compared with the corresponding period last year, but it may not be a true reflection of the country’s economic recovery process. This is because the base for comparison is very low, set […]
The latest data on the first quarter of the current financial year 2021-22 shows a big jump in the gross domestic product (GDP), compared with the corresponding period last year, but it may not be a true reflection of the country’s economic recovery process. This is because the base for comparison is very low, set by the complete nationwide lockdown during the first quarter of the previous year. The data, released by the Ministry of Statistics and Programme Implementation, showed that in Q1 of 2021-22, India’s GDP grew 20.1% while the gross value added (GVA) grew 18.8%. However, the key aspect here is that GDP and GVA had contracted by 24.4% and 22.4%, respectively in Q1 of the last financial year because of the pandemic outbreak and its all-pervading impact on the economy. The data suggests that the economic impact of the first wave of the pandemic was much more severe compared with the second wave though India still has a long way to achieve its pre-pandemic output levels. Barring the agriculture sector, none of the other key sectors saw their output surpassing levels seen in the first quarter of 2019-20, the pre-Covid period. Though the government has claimed that the economy was on a recovery path, it must be pointed out that the GDP level in the first quarter of 2021-22 is still 9.2% lower than the level attained in the first quarter of 2019-20.
A closer look at the performance indicates that some of the gains that the Indian economy had made by posting a positive quarterly GDP growth of 0.5% in the third quarter and 1.6% in the fourth quarter of 2020-21 got lost due to the impact of the second wave. However, it is a matter of relief that despite the second wave of Covid-19, the economic activities remained largely unhindered as the local and regional restrictions were not as stringent as they were during the first wave. For a country to achieve a V-shaped recovery, a goal often cited by the government, it requires the absolute GDP of the economy to get back to the level before the crisis. At present, India’s total output in Q1 of 2021-22, whether measured through GDP or GVA, is nowhere close to what it was in Q1 of 2019-20, the pre-pandemic year. In the first quarter of the current year, the private consumption demand, considered the biggest growth engine, was down to almost the level that was seen in 2017-18. Unless the consumption demand increases, the investments will not flow in. Though the government had given some tax breaks and other incentives, the strategy has not yielded the desired results in the absence of a rise in the consumption demand.
Now you can get handpicked stories from Telangana Today on Telegram everyday. Click the link to subscribe. Click to follow Telangana Today Facebook page and Twitter .
