Hope on horizon
The govt’s ability to vaccinate a significant population in quick time will be the key driver of economic growth
The worst is behind us. Hope is on the horizon. The virus may have left bruises all around but it has not beaten humanity. The spirit of resilience and optimism continue to guide us at the dawn of the new decade. With the arrival of a clutch of Covid-19 vaccines — the result of the biggest scientific efforts in human history — there is now light at the end of the tunnel. While there is no reset button to erase the pandemic-inflicted miseries of the year 2020, the hard lessons learnt during the crisis will surely prepare us better to face future challenges. For India, the economic recovery is expected to be faster than expected. There is a sense of optimism across the board —investors, markets, policymakers and the general public. The year ended on a positive note for Indian shares as the market appears bullish on the back of vaccine optimism and a slew of liquidity support measures. The government’s ability to vaccinate a significant population in quick time will be the key driver of economic growth as it will give confidence to people to spend and invest, resulting in demand generation and revenue growth for companies. The global investor mood is also upbeat. As investors exited safe havens of the US treasuries searching for higher returns, there was a surge in capital flows to India.
While the Reserve Bank of India is hopeful that growth will enter the positive zone in the ongoing quarter itself, the Niti Aayog has gone further in predicting that the Indian economy will grow at 10% in real terms in 2021-22 and will reach the pre-Covid level by the end of the year. The green shoots have been endorsed by a United Nations report, which has forecast that the country’s economy could prove to be the ‘most resilient’ in South and South-West Asia over the long term. The report observes that though the FDI inflows to the region decreased 2%, from $67 billion in 2018 to $66 billion in 2019, India’s share at $51 billion went up 20% in the corresponding period. The uptick in agriculture and manufacturing sectors has been cited as a major driving force for economic revival. However, the prolonged unrest over the new farm laws threatens to impede the overall growth as agriculture continues to be the backbone of the economy, even during the pandemic. The Centre must find an immediate solution to the impasse. Similarly, the government should go all out to handhold the Micro, Small and Medium Enterprises, which not only need an economic stimulus but also high demand to get back on their feet. The key to sustaining recent gains is to ensure that consumer and investor confidence remains strong.
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