Page 422 - ES 2020-21_Volume-1-2 [28-01-21]

State of the Economy 2020-21: A Macro View 49

 Inflation, mainly driven by food prices, remained above 6 per cent for much of the
year, given supply disruptions. The softening of CPI inflation recently reflects easing
of supply side constraints that affected food inflation.

 The weak demand led to a sharper contraction in imports than exports, with Forex
reserves rising to cover 18 months of imports.
 Sharp rise in commercial paper issuances, easing yields, and sturdy credit growth to
MSMEs, portend a revamped credit flow mechanism for enterprises to survive and grow.
 As part of India’s four-pillar strategy, calibrated fiscal and monetary support was
provided attuned to the evolving economic situation, cushioning the vulnerable in the
lockdown and boosting consumption and investment while unlocking. Long-pending
structural reforms in agriculture, mining, labour, etc. were concurrently undertaken
for the economy to return to the potential growth path, keeping super-hysteresis at
bay. The estimated real GDP growth for FY 2022 at 11 per cent is the highest since
independence.
 India became the fastest country to roll-out 10 lakh vaccines in a matter of six days
and has also emerged as a leading supplier of the vaccine to Brazil and neighbouring
countries.
 With the economy’s returning to normalcy brought closer by the initiation of a mega
vaccination drive, hopes of a robust recovery in services sector, consumption, and
investment have been rekindled.
 India’s mature policy response to this “once-in-a-century” crisis thus provides
important lessons for democracies to avoid myopic policy-making and demonstrates
the significant benefits of focusing on long-term gains.

REFERENCES
Gourinchas, P-O (2020), “Flattening the Pandemic and Recession Curves”, VoxEU.org, 3 June.

Hansen, Lars Peter. and Thomas J. Sargent. 2001. “Robust control and model uncertainty”.
American Economic Review 91(2), 60–66.

International Monetary Fund. “World Economic Outlook” Various issues
Schueller Emily, Eili Klein, Katie Tseng, Geetanjali Kapoor, Jyoti Joshi, Aditi Sriram, Arindam
Nandi, Ramanan Laxminarayan. “COVID-19 for India Updates” March 24,2020. https://cddep.
org/wpcontent/uploads/2020/03/covid19.indiasim.March23-2-eK.pdf

World Bank. “Global Economic Prospects” June 2020
World Bank. “Global Economic Prospects” July 2021

Xavier Estupinan & Mohit Sharma & Sargam Gupta & Bharti Birla, 2020. “Impact of COVID-19
Pandemic on Labour Supply and Gross Value Added in India” Indira Gandhi Institute of Devel-
opment Research, Mumbai Working Papers 2020-022.