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The Indian economy affected by the pandemic begins to show signs of reactivation

India witnessed a year of calamity and economic recession as the South Asian nation remained the second worst hit country by the COVID-19 pandemic with a death toll of 10,266,674 and a death toll of 148,738 as of the final day. of the year.

ECONOMIC RECESSION:

The 68-day shutdown, starting on March 25, had a cascading effect on India with a population of over 1.3 billion, as nearly all manufacturing activities came to a halt, unemployment soared like never before and the people were left with minimal purchasing power at their disposal.

According to official figures, the country's Gross Domestic Product (GDP) fell a strong 23.9 percent during the first quarter of the current fiscal year (April 2020-March 2021).

With unemployment and uncertainty on their faces, hundreds and thousands of workers walked hundreds of miles to their respective homes, with no means of transportation available.

A farmer harvests wheat in Meja Village in India's northern Uttar Pradesh state on April 18, 2020.


Except for agriculture, only a few essential services, such as food and medicine, were allowed during this period as the federal government tried to curb the spread of the virus across the country.

The construction sector saw a whopping 50.3 percent drop, while the manufacturing sector saw a 39.3 percent drop. In addition, electricity, gas, water and other public services were reduced by seven percent, and commerce, hotels, transportation, communications and broadcasting-related services contracted by 47.0 percent.

Only the agricultural, forestry and fishing industry registered a growth of 3.4 percent in the April-June quarter.

Signaling a technical recession for the first time in India's history, the country's GDP for the following quarter contracted by 7.5 percent, albeit in defiance of the more anticipated result of -12 percent.

Official figures showed that during the second quarter, the manufacturing industry grew 0.6 percent, while the electricity, gas, water supply and other utilities segment grew 4.4 percent. Agriculture, forestry and fisheries grew at a steady rate of 3.4 percent.

Among other industries, the contraction in commerce, hotels, transportation, communications and broadcasting-related services was 15.6 percent, much better from a 47.0 percent contraction in the first quarter. The construction sector also showed a contraction of 8.6 percent, better than the 50.3 percent contraction in the first quarter.

The Chief Economic Advisor of the federal government, K.V. Subramanian called it a "faster than expected recovery."

Stranded migrant workers line up to board buses heading to their places of origin during the prolonged blockade to curb COVID-19 in Ghaziabad, India, on May 18, 2020.


The more than expected economic recovery was possible thanks to the stimulus packages announced by the federal government, especially aimed at boosting Micro, Small and Medium Enterprises (MSMEs), which are considered the backbone of India's economic activity.


HIGH UNEMPLOYMENT:

The pandemic further exacerbated unemployment, one of the key problems the country has been facing for decades, as hundreds of thousands of people, particularly workers and mid-level workers, were left without work without industrial or manufacturing activity.

The unemployment rate reached 23.5 percent in April and May. It fell to 17.5 percent in the first week of June, and then fell steeper to 11.6 percent in the second week of June.

It fell further to 7.4 percent in July, lower than the average unemployment rate of 7.6 percent for the entire 2019-20 period, but slightly higher than the 7.3 percent recorded a year ago, in July. of 2019.

India's unemployment rate for the month of November stood at 6.51 percent, the lowest since September 2018, when it was 6.47 percent, according to figures provided by the Monitoring Center for the Indian Economy, a private think tank.

With the economy virtually paralyzed after the 68-day close, the reopening of the manufacturing sector gave a much-needed boost as the auto sector played an anchoring role for sheet metal.

Due to an increase in the production of durable consumer goods, India's industrial production grew 3.6 percent in October, the fastest pace in the past eight months since closing in March.

India's total exports during April-September were US $ 125.06 billion, registering a drop of 21.43 percent from the same period last year. Imports during these six months stood at 148,690 million dollars, compared to 248,080 million dollars in the same period of the previous year, registering a fall of more than 40 percent.

Passengers maintain social distance inside a subway train compartment in New Delhi, India, on September 7, 2020.


For the first time in six months, during September the country's exports had increased 5.27 percent to US $ 27.4 billion. The increase was primarily attributed to ready-made apparel, engineering products, petroleum products, pharmaceuticals and carpets.


ECONOMIC RECOVERY:

Economic experts said that the Indian economy is showing signs of revival and its growth story is set to return in the next financial year (April 2021-March 2022).

Officials from the Reserve Bank of India (RBI), citing its latest "State of the Economy" bulletin, said in a recent article that positive indicators show the economy is emerging from the "deep abyss" of COVID-19 and it is rushing towards a place in the "sunlight".

The latest indicators of economic activity suggest that real GDP growth is expected to explode into positive territory in the third quarter of this fiscal year to a meager 0.1 percent, according to the article.

International credit rating agency Moody's has raised India's economic growth forecast for 2021 from 8.1 percent to 8.6 percent.

In its latest report, the International Monetary Fund (IMF) described India as the fastest growing economy, adding that its growth rate in the coming year will be around 8.8 percent, which will be among the highest in the world.

Experts said that India's GDP growth rate will be back in positive territory from the third and fourth quarters of this fiscal year due to normalized industrial activities and positive growth in utility sectors such as agriculture, electricity, etc.

In a recent interview with a government publication, Subramanian said: "I am cautiously optimistic as the data shows a good economic recovery."

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