When a previous fiscal year saw a recession, it does not make sense say the economy grew better than the previous year. Instead, a better indicator would be to compare growth using 2019 data, i.e., April-June 2021 vs. April-June 2019 GDP growth rate. This comparison would tell us that India's growth rate is 9.2% lower than what it was in 2019 during those months.
Although, from another point of view, the praise of India's growth rates makes sense. India has seen the highest growth rates in the world over the past year and a near-perfect V curve that suggests the economy has returned to the state it was in before the 2nd wave in a very short time. These perspectives justify the praise India's 20% growth rate.
Additionally, measures like record breaking vaccinations, leasing of national assets to raise an equivalent of $81.9 billion, and continuing major infrastructure projects that employ hundreds of millions of daily-wage laborers, and many others providing a ray of hope for an improving economy, rising up better after devastation.
With current figures of growth over past year, economists and international organizations, including the IMF, are predicting much better growth rates than what they previously predicted. It is remaining to see whether India will live up to those claims, especially when on one side, until a few weeks ago, it was predicted India will face the deadliest third wave of the delta plus variant of the virus, and on the other side, recently, it is predicted India is entering an endemic stage, like the flu in the US, where it just exists like a regular disease contained within India.
3 comments:
With the year 2020 being a massive recession for nearly every economy, it makes sense that countries are seeing extremely high economic growth rates right now. It is great to see such a great turn around in the economy, but it is important to understand the numbers that you are seeing. Like you mentioned, when you compare India's current GDP growth rate of 2021 to 2019 there is still a drop off. It is good to see numbers turning around, but when you come out of a recession it is important to understand that everything that was lost in the previous year won't just miraculous come back a year later. It took nearly six years for the US economy to fully recover after the 2008 financial crisis.
Especially after a year of pent up purchasing needs including electronics, it is extremely promising to see India going through such massive growth. I hope that the delta variant and other COVID variants like it don't hinder the growth the country is experiencing and continue to see companies invest in the workforce. India may follow the same type of growth like China did where they were able to elevate themselves into a developed nation and see a significant portion of the population lifted out of poverty.
Periods of exponentially high growth rates come with a number of negative side effects including [but not limited to] pollution, increases in income inequality, and inflation. If the government and federal bank are able to combat some of these issues ahead of time, the country will be able to sustain a high GDP growth for a prolonged period of time. However, the rapid mutation of the COVID virus may hinder the growth rates because of the number of people affected and the number of resources the government will need to care for the sick population.
The government could focus their attention on redistributing the wealth in the economy to reduce poverty rates and improving health care facilities based on the current state of the pandemic.
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