With the Centre lifting the Covid lockdown, and with the number of cases coming down, it seems to be getting better for India’s financial health. Finance Minister Nirmala Sitharaman has already announced a slew of schemes under the Atma Nirbhar Bharat Abhiyan 3.0 to help stimulate the healing economy.
Rating Agency Moody’s has also revised India’s Gross Domestic Product from -8.9% from -9.6% as reported earlier for 2020. The negative indicates a contraction in the GDP.
This seems to bring hope to India, as earlier, the agency had reported that the country had the biggest contraction — 24% year-over-year — in the second quarter. Moody’s noted that this was due to the nationwide lockdown imposed to control the spread of Covid-19. While the lifting of the lockdown is improving the country’s economy, the agency seems to think that such a development is not stable since the condition of some states remains problematic, and various other places are still under lockdown. The recovery has been “patchy”.
The government had introduced the Atma Nirbhar Bharat Abhiyan to help stimulate the economy. They had introduced various schemes and projects to assist in employment creation in both formal and informal sector as well as a financial boost to various sectors. However, following the announcement of the second version of the stimulus package, Moody’s noted that the “small scale” measures point to the government’s limited budgetary firepower to support the economy. The agency had pointed out that they expected India’s GDP to fall 11.5% in 2020-21. This was also based on the market contraction that happened due to the coronavirus situation.
Recently, the Reserve Bank of India had reported that India had technically entered into its first recession. “India has entered into a technical recession in the first half of 2020-21 for the first time in its history with Q2:2020-21 likely to record the second successive quarter of GDP contraction,” the report said. They added that while the Covid-induced lockdown had pushed the country into contraction, the markets seem to be opening up as the lockdown is being lifted. “Since the assessment of the performance of the Indian economy in the first half of 2020-21, several developments point to a window of respite opening up and an unshackling of economic activity from the grip of Covid-19 as the festival season sets in,” the central bank added in the report,” RBI added.
With the latest slew of schemes and stimulus, the finance ministry, as well as the Centre, hopes to create more jobs and kick-start the economic revival.