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Despite a low base effect, it can be said that there has been a tangible recovery in the economy with several major sectors gradually limping back to normalcy.The near future trajectory depends to a much larger extent on the success of vaccination programme and the extent to which the health infrastructure gets ramped up!

If we look at the growth trajectory right since Q1 of FY 21 there has been a sequential improvement over the quarters. Starting from an abysmally low growth of -24% in the Q1 of FY 21 there is a growth of 20.1% in Q1 of FY 22.

The widely heard comment on this is that it is because of low base effect. It is indisputably so as growth is reported with respect to the corresponding period in the previous fiscal. Thus the figure seems to be representing a dramatic recovery relative to the same period in the previous fiscal. However there is a contraction of 9.2% corresponding to same period in the FY 20 (the pre-pandemic interval) as is evident from the data shown below:

GDP at constant (2011-12) prices :

Having admitted all this,the recovery is still appreciable and the economy is said to have exhibited a reasonable degree of resilience though the recovery cannot be termed as V-shaped.

Some important perspectives :

*The lockdowns during April -June quarter of the current fiscal were regional but not national enabling a bounce back.Also these lockdowns were less stringent than those in the same period of FY21

*In absolute terms the GDP in Q1 of FY 22 is less than Rs.6 lakh crore relative to that in Q1 of FY 21.It is important to bear in mind that economic cost to a tune of $8 billion per week (about Rs.60,000 crore per week) in May in the 2nd wave as per a report might have played a significant role In pruning down the recovery to less than six lakh crores.It is easy to understand the impact of such a huge cost at Rs.2.4 lakh crore in a single month for want of an adequate health infrastructure.

*Sectors like construction (that provides livelihood to about 5 crore people and which contributes to more than 5% to GDP), manufacturing ( that contributes to 17% of GDP and which is a source of employment to about 27 million or 2.7.crore people) ),Trade,Hotels, Tourism have all shown a dramatic uptick during Q1 though the figures are still below the levels reported in the pre-pandemic period

*Sectors like Agriculture, Forestry  and Fishing have reported a commendable recovery surpassing the figures reported in the pre-pandemic period.

*The intention to increase the GDP share of the manufacturing sector from the current 17% to 20-25% as expressed by the Heavy Industries Minister Mahendranath Pandey is an appreciable move.

*Similarly the desire to increase the automobile sector’s share in GDP from the present 7% to 12% as expressed by the Union minister Nithin Gadkari too deserves the merit of attention.

These moves help increasing the employment potential which provides the source for consumption.An increased consumption in turn, generates greater demand which In turn generates an appetite for investment and thus the wheels of economy get lubricated and keep rolling without retardation.

CONCLUSION

The sustainability, durability and the buoyancy of recovery experienced in Q1 depends to a much larger extent on the much talked about third wave and the lethality that may be unleashed by it. An effective management of this depends upon the success of vaccination and the ramping up of health infrastructure.No doubt the vaccination has gained an awesome pace (see the link below)and if the nation is able to have 70% of its population fully vaccinated by the year end as can be understood from the data projected by GOI it is needless to say that the landscape of economy is going to be much fascinating during the rest of the fiscal barring unforeseen developments. All in all, the near future trajectory depends upon the gap between the various policies contemplated and implemented or the gap between the promise and performance.

Let us hope that the nation is going to trace a coveted trajectory !

https://ramanagove.scrollstack.com/post/10227/The-Arithmetic-of-Vaccination

LET US GROW GREEN & GO GREEN !