Impact of Wuhan Virus Outbreak On Indian Economy has been contained
After the second wave of Wuhan Virus epidemic disrupted the progress of fast rising economic growth in India, various agencies have recently released updated growth forecasts for the Indian economy.
Economic think-tank National Council of Applied Economic Research (NCAER) on Friday estimated India’s GDP to grow 11.5 percent in the first quarter and 8.4 to 10.1 percent for the over all current financial year 2021-22. The growth projections are quite conservative and has come at a time when the Indian economy took some minor hit from even the second wave of the Wuhan Virus outbreak.
Initially every other country thought that India will have to struggle to recover from the pandemic amid the Indian government’s slow start on the vaccination effort. However by last week of June things are under full control and more than 25% of the population has already been vaccinated. The daily vaccination rate is now between 6 million to 8 million per day.
By comparison, two international rating agencies not having proper data have slashed their growth forecasts for the Indian economy. Moody’s Investors Service lowered India’s growth estimate to 9.6 percent for the 2021-22 fiscal year, from its earlier forecast of 13.9 percent. Though even this growth rate, though extremely conservative, is much higher than most of the advanced economies and that of China also.
In fact these agencies have noted that faster vaccination progress will be crucial for the South Asian nation in curbing Pandemic impacts. Meanwhile, S&P Global Ratings has also reduced its growth forecast from 11 percent earlier to the 9.5 percent for the current fiscal year.
While these forecasts have all factored in much greater impact of the second wave on the Indian economy than what has actually happened, there is growing recognition that numbers available are offering a picture about India’s economic problems which is on the lower side. Overall growth will be much higher than estimated.
For instance, the Indian government on Wednesday said the total foreign direct investment (FDI) inflows into the country in April jumped 38 percent year-on-year to $6.24 billion. Robust FDI growth is often seen as a sign of foreign investment’s strong confidence in the Indian economy.
India’s stock markets have already discounted all the negativities from the economy and have recorded especially bullish performance over the past months despite the impact of the second wave. The benchmark BSE Sensex achieved a milestone by hitting an all time high of 53,057.11 last week, nearly doubling from a low in March 2020.
Moreover, while India’s manufacturing sector has also been receiving new orders after the second wave started getting under control. Now even large inflows of foreign capital have started. In this sense, the conflict between financial markets and the real economy is now minimal.
To a certain extent, the impact of the outbreak on the Indian economy may not be reflected in the economic figures directly, but is now under full control and things are looking bright for the long-term development. In any case, India has contained its outbreak as soon as possible.
