Government has played down the threat of Omicron, saying that India’s growth and recovery are back for good.
Real GDP growth in the second quarter of this financial year at 8.4 per cent means output has recovered more than 100 per cent of the pre-pandemic output in the corresponding quarter of FY 2019-20, according to the monthly review of the finance ministry, released Saturday afternoon.
It further says that with recovery to pre-pandemic levels being seen in 19 out of 22 high frequency indicators monitored in the months of September, October and November, India’s recovery is expected to gain ‘further strength’,
While the review noted the risk posed by the new COVID-19 variant Omicron, it played down any long lasting impact from it to the ongoing recovery. “Preliminary evidence suggests that the Omicron variant is expected to be less severe and more so with increasing pace of vaccination in India,” the report noted, also pointing out how COVID-19 cases presently are shrinking.
India is among the few countries that have recorded four consecutive quarters of growth amid COVID-19 (Q3, Q4 of FY21 and Q1,Q2 of FY22) reflecting the resilience of the Indian economy, it said, by a revival in services, full-recovery in manufacturing and sustained growth in agriculture sectors.
The recovery suggests kick-starting of the investment cycle, supported by surging vaccination coverage and efficient economic management activating the macro and micro drivers of growth.
On the demand side, exports and investment constituted the macro drivers rising by 17 per cent and 1.5 per cent respectively over their pre-pandemic levels. Recovery in private consumption also jumped from 88 per cent in Q1 to 96 per cent in Q2 to become an emerging macro growth driver. On the supply side, while real GVA in agriculture continued to be higher than its pre-pandemic level, manufacturing and construction sectors also surpassed their pre-pandemic levels to emerge as key drivers of growth. Reassuringly, GVA in trade, hotel and communication services sharply improved from pre-pandemic recovery rate of 70 per cent in Q1 to 90 per cent in Q2, to become another emerging growth driver of the economy as contact-based services overcame the fear of the pandemic.