Amid chaos and ruckus caused by the COVID-19, India’s economy had suffered a devastating setback in the first quarter. India’s GDP had contracted by an unprecedented humongous amount of 23.9%. Similarly, the second quarter estimates revealed that India’s economy (GDP) had contracted by 7%.
The dawn of 2021 is proving to be a restart for India’s “growth story”. This is because on Tuesday, the International Monetary Fund revised India’s growth projections higher citing a strong recovery. This has been quite reiterated by the finance ministry in the past months citing a V shaped recovery.
Piyush Goyal, Commerce and Industry minister expressed his affirmation for the IMF projections for India and called it as a “Bright star in global economy” Goyal tweeted, “Bright star in global Economy: India to continue its growth story at a rapid pace under PM Narendra Modi ji, with IMF News projecting an impressive 11.5% growth rate for India in 2021. It makes India only major economy to register double-digit growth in 2021”.
According to its latest revisions in Economic Outlook report for January, for India’s growth, it stated that India’s gross domestic product is expected to grow by 11.5% in 2021. This comes as a ray of new projected hope as its earlier grim projection suggested a growth of 7.8% in 2021, made in the month of October.
The body estimated that India’s economy contracted by 8% in 2020. The figure is a positive revision of its estimate in October 2020, when it had predicted that the India’s growth rate will shrink by a mighty 10.3%.
Moreover, IMF report suggested that India will be the only economy to register a double-digit growth in 2021 and will be on the successful path of rebounding to achieve the target of its ambitious $5 trillion economy.
India’s likely growth projection is to be followed by China, which is expected to grow by 8.1% in 2021. However, as the world witnessed unprecedented contraction due to the novel corona virus, China’s economy grew by 2.3% in 2020, according to the IMF data, making it the only major economy in the world to a record positive growth.
India’s strong rebound story can be attributed to the fact that India recorded huge festive sales and exhibited a strong pent-up demand due to prolonged lockdowns. Also, strong FDI flows in the FY 2020 contributed to India’s strong rebound story.
The report doesn’t only bring about positive prospects for India’s growth but also for the world economy. In its report, IMF estimated a global contraction of 3.5% in 2020. Thus, a revised estimate predicts improvement of 0.9 percentage points from the 4.4% slump emphatically reflecting stronger-than-expected growth in the second half of 2020.
It furthermore predicted global growth of 5.5% in 2021, a substantial increase from the October report by 0.3 percentage points. Its reasons include expectations of a vaccine-powered uptick and the policy support in the United States, Japan and a few other large economies.
Simultaneously, earlier on Tuesday, the United Nations Department of Economic and Social Affairs in its separate report had estimated that India’s economy had contracted by a substantial 9.6% in 2020, while it is projected to grow at 7.3% in 2021.
With India’s woes of economic slump in 2020, IMF report proves to be the light at the end of the tunnel. Market expert DK Mishra, said that COVID -19 has impacted the everyone immensely worldwide but Indian economy persisted due to the strong measures taken by the Modi government. This is evident from the strong GST collections and good agriculture growth reported. Furthermore, positive COVID-19 vaccine news and daily falling COVID-19 positive rates are sure to play their substantial part in India’s strong growth.