New Delhi: India is reaping the “lockdown dividend” from the preventive measures it adopted at the onset of the COVID-19 pandemic indicating its willingness to take short-term pain for long-term gain, said the Economic Survey tabled in Parliament on Friday.
The document also said despite the hard-hitting economic shock created by the global pandemic, India is witnessing a V-shaped recovery with a stable macroeconomic situation aided by a stable currency, comfortable current account, burgeoning forex reserves, and encouraging signs in the manufacturing sector output.
“India is reaping the ‘lockdown dividend’ from the brave, preventive measures adopted at the onset of the pandemic…,” it said in the opening chapter titled ‘Saving Lives and Livelihoods Amidst a Once-in-a-Century Crisis’.
Unlike Oscar Wilde’s cynic, ‘who knows the price of everything and the value of nothing,’ India’s policy response to the pandemic stemmed fundamentally from the humane principle advocated eloquently in the Mahabharata that ‘Saving a life that is in jeopardy is the origin of dharma.’
“Therefore, the ‘price’ paid for temporary economic restrictions in the form of temporary GDP decline is dwarfed by the ‘value’ placed on human life,” said the survey.
The document further said India recognised that while GDP growth will recover from the temporary shock caused by the pandemic, human lives that are lost cannot be brought back.
The response drew on epidemiological and economic research, especially those pertaining to the Spanish Flu, which highlighted that an early, intense lockdown provided a win-win strategy to save lives, and preserve livelihoods via economic recovery in the medium to long-term.
“To implement its strategy, India imposed the most stringent lockdown at the very onset of the pandemic. This enabled flattening of the pandemic curve and, thereby, provided the necessary time to ramp up the health and testing infrastructure,” it said.
Faced with enormous uncertainty, India adopted a strategy of Bayesian updating to continually calibrate its response while gradually unlocking and easing economic activity.
As per the survey, India has transformed the short-term trade-off between lives and livelihoods into a win-win in the medium to long-term that saves both lives and livelihoods.
By estimating the natural number of cases and deaths expected across countries based on their population, population density, demographics, tests conducted, and the health infrastructure, the survey compare these estimates with actual numbers to show that India restricted the COVID-19 spread by 37 lakh cases and saved more than 1 lakh lives.
According to the document, Uttar Pradesh, Gujarat and Bihar have restricted the case spread the best; Kerala, Telangana and Andhra Pradesh have saved the most lives; Maharashtra has under-performed the most in restricting the spread of cases and in saving lives.
India was amongst the first of the countries that imposed a national lockdown when there were only 500 confirmed cases.
The stringent lockdown in India from March 25 to May 31 was necessitated by the need to break the chain of the spread of the pandemic.
India GDP to grow 11 pc in FY’22 aided by V-shaped recovery
India’s economy is likely to rebound with a 11 per cent growth in the next financial year as it makes a ‘V-shaped’ recovery after witnessing a pandemic-led carnage, the Pre-Budget Economic Survey said on Friday.
The Gross Domestic Product (GDP) is projected to contract by a record 7.7 per cent in the current fiscal ending March 31, 2021.
India witnessed its last annual contraction of 5.2 per cent in fiscal year 1979-80.
The Economic Survey 2020-21 said the agriculture sector is the only silver lining while services, manufacturing and construction were most hit by the lockdown that was imposed to curb the outbreak of the COVID-19 pandemic.
“After an estimated 7.7 per cent pandemic-driven contraction in 2020-21, India’s real GDP is projected to record a growth of 11.0 per cent in 2021-22 and nominal GDP by 15.4 per cent. These conservative estimates reflect upside potential that can manifest due to the continued normalisation in economic activities as the rollout of COVID-19 vaccines gathers traction,” the survey said.
The growth will further be supported by supply-side push from reforms and easing of regulations, push for infrastructural investments, boost to manufacturing sector through the Productivity Linked Incentive Schemes, recovery of pent-up demand for services sector, increase in discretionary consumption subsequent to roll-out of the vaccine and pick up in credit given adequate liquidity and low interest rates, it said.
The survey tabled in Parliament by Finance Minister Nirmala Sitharaman said there is likely to be a fiscal slippage during the year based on the available trends for April to November 2020.
India is expected to witness current account surplus during the current financial year after a gap of 17 years, it said.
India has recorded a current account surplus of 3.1 per cent of GDP in the first half of the year largely supported by strong services exports.
“Given the trend in imports of both goods and services, it is expected that India will end with an annual current account surplus of at least 2 per cent of GDP after a period of 17 years,” it said.
The contraction of 7.7 per cent in the current fiscal is on account of disruption in normal activities due to the pandemic.
However, India is expected to be the fastest growing economy in the next two years, the survey said.
Earlier in the week, the International Monetary Fund projected an impressive 11.5 per cent growth rate for India in 2021, making the country the only major economy of the world to register a double-digit growth this year amid the pandemic.
As per the advanced estimates of national income released by the National Statistical Office (NSO), India’s GDP is estimated to contract by a record 7.7 per cent during 2020-21 as the COVID-19 pandemic severely hit the key manufacturing and services segments.
Other global agencies too have projected contraction in the country’s economic growth for the fiscal 2020-21.
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