Impact of Omicron to be less severe, says the Finance Ministry
India will be among only a few economies in the world to rebound strongly from Covid-19 induced economic contraction of 2020-21, a Finance Ministry report said assuaging that the Omicron variant’s impact on the economy will be less severe due to rapid vaccination.
Real GDP in Q2 of FY2021-22 has grown by 8.4% YoY, recovering more than 100% of the pre-pandemic output in the corresponding quarter of FY2019-20, said the monthly Economic Review prepared by the Finance Ministry.
“India is among the few countries that have recorded four consecutive quarters of growth amid Covid-19 (Q3, Q4 of FY21 and Q1, Q2 of FY22) reflecting the resilience of the Indian economy. The recovery was driven by a revival in services, full-recovery in manufacturing and sustained growth in agriculture sectors,” it said.
The recovery suggests kick-starting of the investment cycle, supported by surging vaccination coverage and efficient economic management activating the macro and micro drivers of growth, the report said.
India’s economic recovery is expected to gain further strength in the remaining quarters of the financial year, as evident from 19 among 22 High Frequency Indicators (HFIs) in September, October and November of 2021 crossing their pre-pandemic levels in the corresponding months of 2019, it said.
“Yet, Omicron, a new variant of Covid-19 may pose a fresh risk to the ongoing global recovery. However, preliminary evidence suggests that the Omicron variant is expected to be less severe and more so with increasing pace of vaccination in India,” the Finance Ministry said.