India's economic growth projected at 7.2% by UNCTAD; recovery slow due to pandemic

The Indian economy could grow at 7.2% in 2021 but, could result in a slight slowdown next year, according to UNCTAD Trade and Development Report 2021. The new report said that the recovery is slowed down due to the cost of rebuilding the post-COVID pandemic along with the impact of food price inflation on private consumption. The UN report further pointed out that India had to face a contraction of 7% during the first year of the pandemic, but showed positive growth of 1.9% in the first quarter of 2021.

However, as things looked to swing in the positive direction, the deadly second wave hit the country along with a slow vaccine rollout. There was a sudden increase in the prices of food and other products like fuel. This further meant that the government had to shut everything down again and had to change its spending pattern. The report says, "Income and wealth inequalities have widened, and social unrest has increased. The Central Bank estimates another sharp contraction (quarter-on-quarter) in the second quarter followed by a rebound afterward." Even though the forecast of 7.2% growth is good for the country, it is not sufficient to reach the economic level before the pandemic. The report further said that the government must take responsibility by introducing various policies, especially on the fiscal front to open up a currently stagnant market.

The situation of other South Asian countries

The report said that the economic growth rate is projected to decelerate to 6.7% in 2022. Other countries in South Asia have suffered a sharp contraction of 5.6% in 2020 as the region found it hard to recover due to a large number of COVID cases and a slow vaccination programme. The impact of the pandemic was inflated due to a poor public health system in these countries. UNCTAD says that the South Asian region will expand by 5.8% in 2021, but the region must remain cautious as opening up the economy will likely be coupled with an increase in COVID-19 cases. These countries are dependant on bigger Western or European nations for their share of vaccines and therefore have not received enough doses.

With ANI inputs