Tuesday, May 24, 2022

Indian economy growing globally

By Satish Singh

After the Corona period, the economy of India and China can remain in a better position, because both the countries have been successful in controlling the corona virus in the year 2020 and the year 2021. According to the International Monetary Fund (IMF), India can grow at 9.5 per cent and 8.5 per cent in 2021 and 2022 respectively, while China can grow at 8.0 per cent in 2021 and 5.6 per cent in 2022. In this way, India will have the fastest growth in the world in the year 2021 and in the year 2022, while China will be in second place.

Further, in the USA, the growth rate will be 6.0 percent in the year 2021 and 5.2 percent in the year 2022, whereas in Germany the growth rate will be 3.1 percent in the year 2021 and 4.6 percent in the year 2022. In France, the growth rate will be 6.3 percent in the year 2021 and 3.9 percent in the year 2022 and in Italy, it will be grown at the rate of 5.8 percent in the year 2021 and 4.2 per cent in the year 2022. In Spain the growth rate will be 5.7 percent in the year 2021 and 6.4 percent in the year 2022, whereas in England, it will be grown at the rate of 6.8 percent in the year 2021 and 5.00 percent in the year 2022. In this connection, Canada & Japan are expected to grow at the rate of 5.7 & 4.9 percent in the year 2021 and 2.4 & 3.2 per cent in 2022 respectively.   

In the year 2021, the economic condition of USA, Britain and many countries of Europe is estimated to be not good due to pandemic. After a modest recovery in the economy in the summer of 2020, the wheels of growth in these countries came to a halt again due to the second wave of the pandemic. The black shadow of Corona is still being reflected on the employment scenario in USA. There has been a significant reduction in the employment growth rate. The economic condition of traders and consumers is bad. According to an estimate, the economy of these countries may contract by about 5.0 per cent in the year 2022.

According to the IMF, the global economy is expected to grow at the rate of 5.9 percent in the year 2021, while the global growth rate is expected to decline by 1 percent in the year 2022.  According to the 2019 report of the US-based research institute World Population Review, India is the fifth largest economy in the world on the basis of nominal gross domestic product (GDP). In this case, USA is in first place, China is in second place, Japan is in third place and France is in fourth place. According to this report, India’s GDP on the basis of purchasing power parity (PPP) is 10,510 billion dollars and it is ahead of Japan and Germany. Due to the high population in India, the GDP per capita is $ 2170, while the GDP per capita in the USA is $ 62,794.

National Statistical Office (NSO) has released the estimated GDP figures in January 2022, according to which India’s GDP can grow at the rate of 9.2 percent in the financial year 2021, While the World Bank has kept India’s growth forecast for the current financial year unchanged at 8.3 percent, as the Indian economy is yet to improve.

At the same time, the IMF, the Indian economy will grow at the rate of 9.5 percent in 2021 and 8.5 percent in 2022. If the GDP growth rate estimates of all agencies are averaged, the Indian economy will grow at the fastest pace in the world.

There has been a significant increase in exports in India in the last 9 months. For the first time, India has exported $ 37.29 billion in December 2021. It has increased by 37 percent on a yearly basis. During April-December 2021, India exported $299.74 billion, which was 48.85 percent higher than $201.37 billion in April-December 2020. India’s imports stood at $ 59.27 billion in December 2021, from $ 42.93 billion in December 2020. In this way, it increased by 38.06 percent. The trade deficit stood at $ 21.99 billion in December 2021, while it stood at $ 143.97 billion during April to December 2021. There has been a significant reduction in the trade deficit due to a significant increase in exports during these nine months. Manufacturing sector activities have strengthened in the month of December. The Purchasing Managers’ Index (PMI) for manufacturing stood at 55.5 in December, 2021. If PMI is 50 or more then it is considered good for the economy.

Global rating agency Moody’s has upgraded the ratings of 9 Indian private and public sector banks from outlook negative to stable. Banks whose ratings have been upgraded by Moody’s include private sector Axis Bank, HDFC Bank, ICICI Bank and public sector Bank of Baroda, Canara Bank, Punjab National Bank, Exim Bank and Union Bank of India. Apart from banks, Moody’s has also upgraded India’s rating from sovereign negative to stable. India’s rating is currently Baa3.

The credit growth rate had come down to 5.26 percent in April 2020. Earlier in 1994, the credit growth rate had come down to 6 per cent. This growth rate was 8.5 percent in January 2020. For a healthy economy, it is necessary to have a smooth rotation in the market, but at present people are hesitant to spend due to Corona. Bank deposits have been increasing continuously since March 2020 & credit offtake has been decreasing.  However, now with the improvement in economic activities, people started spending. For the first time in September 2021, there has been an increase of 0.1 percent in credit offtake from the level before the Corona period on a year-on-year basis.

The Union Labour Ministry has released the employment survey data for the second quarter of the current financial year on January 10, 2022, according to which there were 3.10 crore jobs in manufacturing, construction, transport, BPO, education, health, housing, IT and financial services, whereas in previous quarter, there were 3.08 crore jobs in these sectors. In this way, 2 lakh new jobs have been created in 3 months.

Before the start of the Corona crisis, masks, PPE kits and other essential items related to corona were not produced in India, but India started producing the necessary products to protect against corona virus without panic even in difficult situations. Not only this, they also started exporting them to those countries where they were needed. In this way, India has emerged globally as a leading supplier of healthcare products during the global crisis caused by Corona.

Today, India’s vaccine diplomacy is in discussion all over the world, while such efforts of China did not succeed. India’s vaccine is reaching from the anonymous countries of Africa to the Caribbean country of St. Lucia. In the supply of vaccines, India is taking care of neighbouring countries on priority basis. According to India’s indigenous vaccine manufacturer Bharat Biotech, the booster dose of Co-Vaccine is successful in stopping the Omicron and Delta variants. The Bharat Biotech has also been successful in developing children’s vaccine.

Today, India is completely self-sufficient in producing all the products related to Corona. Due to being financially strong, India is also helping the needy countries. At the same time, with its vaccine diplomacy, India has also been able to build healthy trade relations with major countries such as the USA and major European and Asian countries, thereby increasing India’s exports as well as importing essential products from other countries.

(Author is Chief Manager at State Bank of India, Mumbai. The views expressed are personal opinion of the author. He can be reached at satish5249@gmail.com and singhsatish@sbi.co.in.)

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