India’s economic growth has picked up, suggesting the recovery “will stay here,” according to an economic adviser to Indian Prime Minister Narendra Modi.
After two consecutive quarters of decline, the Indian economy grew 0.4% year over year in the October-December quarter. This emerges from data released last Friday by the National Bureau of Statistics. This compared to revised contractions of 7.3% in July-September and 24.4% in April-June.
“I think all in all I would say the recovery is here to say,” Anantha Nageswaran, a part-time member of the prime minister’s economic advisory board, said in an interview on CNBC’s Street Signs Asia on Monday.
“Leading indicators for January and February show that the recovery is picking up momentum and that what happened in the third quarter is continuing,” he added.
India’s Treasury Department said in a statement following the release of GDP data that the economy had returned to “pre-pandemic positive growth rates” reflecting a sustained V-shaped recovery.
Street barber Ranjit (R) shaves a customer’s beard under the overpass in Amritsar on September 22, 2019.
Narinder Nanu | AFP | Getty Images
After several Indian states reported a significant drop in the number of Covid-19 cases for months, there was a sharp rise in infections in February.
Still, Nageswaran is optimistic that India’s economic progress will continue to gain momentum as the country benefits from its “vaccine diplomacy” that could boost business confidence.
“Overall, India’s launch of vaccines and their export to other countries is an important step for India to restore global investors’ confidence in its manufacturing capabilities,” he said, adding that the strategy will also help defend “India’s goodwill” to consolidate its neighboring countries.
The Indian government has announced a vaccine diplomacy strategy that will deliver millions of doses of locally made AstraZeneca vaccine to nearby countries, even though the domestic vaccination campaign has only just begun. According to Reuters, India has delivered 15.6 million doses of the vaccine to 17 countries, either through donations or through trade agreements.
However, in an interview on CNBC’s “Squawk Box Asia” last week, JPMorgan emerging markets chief economist Jahangir Aziz warned that the Indian government may underestimate the extent of the potential damage to the economy.
He warned that a major risk to India’s economic recovery is that millions of households and small businesses may be cut off from the credit they need.
“The loss of income related to the coronavirus pandemic has been billions of dollars annually, according to Aziz.” We know the public companies haven’t suffered as much, so it has to be the SMEs (small and medium-sized enterprises) and households have been hit a lot harder, “he said.