After a modest that almost generalized dip in January owing to the third Covid wave and the economic activities on an aggregate basis seem to have recovered smartly in early February.
The pandemic’s effect is sudden abated and turned out to be less severe than in the previous two waves. For the advance estimate of a real gross domestic product expansion of 8.8% for 2021 to 22 to come true.
A quick and strong consumption rebound from February to March is imperative. It required is robust public capital expenditure in the final months of the year. Central, state governments will have to stick to the CAPEX estimates in their Budgets.
Absent the prospect of an immediate spurt in private investments and the growth revival can take firm roots in the first half of 2022 to 23. In an abiding recovery in domestic consumption. The significant help could come from export to boom.
It may last for a long period, thanks to the industrial resurgence in advanced economies supply-side constraints and another strong Covid wave that could impede the pace of shipments.
An incipient recovery in a large part of the economy was briefly interrupted by the state-wise restrictions in January, analysts expect 1 to 2% IIP growth in January 2022 as against a ten-month low of 0.4% in December.
The reason is that several sectors remained less affected by the curbs and the effect of an unfavorable base waned.
The production of Rabi crops could also support the nascent recovery. But this would spur rural consumption will rely on the efficient use of the Minimum Support Price system to boost farmers’ income.
Many lingering threats to the economic revival. Corporate profits, a key driver of the gross value added in recent quarters it could see a moderation in Q4. 2021 to 22 as input costs are skyrocketing.
The informal sector is debilitated by the pandemic and several policy steps that hit their business and don’t appear to be poised for a meaningful turnaround.
There is also the uncertainty over how long the Reserve Bank of India keeps the key rates at historic low levels and retains its accommodative policy stance Month.
It also picks up in inter-state commerce, consumption of fuel and electricity in the first half of February, and sustained impressive growth in non-food credit for a few months in January are among a few sanguine high-frequency indicators.