Vaccination Pace Will Decide Economic Recovery Of India: A delay is expected in the economic recovery of the country according to economists across the globe. With the rising price of the fuel, currency India is experiencing price pressure. However, it is being indicated that the Reserve Bank of India is not expecting to raise any interest rates, especially until the next financial year.
Currently, the Reserve Bank of India is racing behind its other market peers who have already raised the rate. The hesitation to increase the current interest rate comes from the concern that it might pose concerns for the growth of the country.
A Look Towards The Economic Recovery Of India
The far-fetched deteriorating condition of the Indian economy is prevented by accommodative monetary policy in addition to other financial injections for the common people with measures like Lottery Sambad and Punjab State Lottery. However, the recovery pace cannot be further improved by continuing the same policy without implementing the apt fiscal support. A Reuters poll has indicated that 68% of the respondents believe that a delayed recovery with limited downside is the greatest risk to the economic growth of India. The Reserve Bank of India is willing to help the government to ensure that the country grows and it is willing to implement the necessary policy for the same. An increase in interest is believed to take place in the future when the economic health of the country is close to recovery.
Even though the economic recovery of the country is grave, the uncertainties for the same are not reflected in the Indian stock market. In fact, during this period the share prices have repeatedly reached record highs. Further, investors are dealing with the situation in a positive manner as many businesses including start-ups recovered from the COVID impact in a better way than expected.
Vaccinations Will Impact Economic Recovery Of India
According to the World Bank, the pace with which India increases vaccination will determine the economic growth of the country this year and beyond. According to the current forecast, the growth projection of the county is 8.3% which is unchanged from the June forecast. The inflation faced by the country is higher than expected and as a result of that, the recovery of the informal sector is relatively slow. The pressure on the Reserve Bank of India due to the high inflation is evident in its accommodative monetary policy stance. The economic recovery of the country can be improved with herd immunity and hence, the vaccination drive of India will play a key role in the economic recovery of the country.
In the fiscal year 2021-22, the Indian economy is projected to grow at a rate of 8.3% with the help of both public investment and incentives which in turn will boost manufacturing. A question when posed to Hans Timmer, World Bank Chief Economist regarding the unchanged June forecast, was answered that even though few indicators have improved, the most recent data when included for the projection draws back to the same figure of June. For creating the protection, high-frequency data is taken into consideration to give the most updated information. Further, Word Bank has commented that the extent of the recovery will further depend on the activities that occur in the informal sector and the pace at which the household income and the small firm normalizes.
The overall economic recovery of the country will depend on the vaccination pace. Further, the implementation of agriculture and labour reforms successfully will help in medium-term growth. The only constraint in it might be posed by weakened household and firm balance sheets. The economic recovery which has taken place in the latter half of 2021 can be mainly attributed to investment and economic unlocking of the country with the help of both regulatory and monetary measures. In the first quarter, growth in GDP by 20.1 is expected in 2022. The GDP growth will be primarily helped by strong export growth and base effect in addition to lesser damage to domestic demand.Vaccination Pace Will Decide Economic Recovery Of India.
Even though the impact of the second wave of COVID was disastrous for the health segment, a very little impact of the same was seen in the economy of the country. Even though growth is projected currently, the downside risk of it involves stress on the financial sector, higher inflation, construction in the monetary policy followed by the slower pace of the vaccination.